TAR DNA-binding protein 43 (TDP-43) is genetically and functionally linked to amyotrophic lateral sclerosis (ALS) and regulates transcription, splicing, and transport of thousands of RNA targets that function in diverse cellular pathways. In ALS, pathologically altered TDP-43 is believed to lead to disease by toxic gain-of-function effects on RNA metabolism, as well as by sequestering endogenous TDP-43 and causing its loss of function. However, it is unclear which of the numerous cellular processes disrupted downstream of TDP-43 dysfunction lead to neurodegeneration. Here we found that both loss and gain of function of TDP-43 in Drosophila cause a reduction of synaptic growth-promoting bone morphogenic protein (BMP) signaling at the neuromuscular junction (NMJ). Further, we observed a shift of BMP receptors from early to recycling endosomes and increased mobility of BMP receptor-containing compartments at the NMJ. Inhibition of the recycling endosome GTPase Rab11 partially rescued TDP-43-induced defects in BMP receptor dynamics and distribution and suppressed BMP signaling, synaptic growth, and larval crawling defects. Our results indicate that defects in receptor traffic lead to neuronal dysfunction downstream of TDP-43 misregulation and that rerouting receptor traffic may be a viable strategy for rescuing neurological impairment.