Synaptogenesis is coordinated by trans-synaptic signals that traverse the specialized synaptomatrix between presynaptic and postsynaptic cells. Matrix metalloproteinase (Mmp) activity sculpts this environment, balanced by secreted tissue inhibitors of Mmp (Timp). Here, we use the simplified Drosophila melanogaster matrix metalloproteome to test the consequences of eliminating all Timp regulatory control of Mmp activity at the neuromuscular junction (NMJ). Using in situ zymography, we find Timp limits Mmp activity at the NMJ terminal and shapes extracellular proteolytic dynamics surrounding individual synaptic boutons. In newly generated timp null mutants, NMJs exhibit architectural overelaboration with supernumerary synaptic boutons. With cell-targeted RNAi and rescue studies, we find that postsynaptic Timp limits presynaptic architecture. Functionally, timp null mutants exhibit compromised synaptic vesicle cycling, with activity that is lower in amplitude and fidelity. NMJ defects manifest in impaired locomotor function. Mechanistically, we find that Timp limits BMP trans-synaptic signaling and the downstream synapse-to-nucleus signal transduction. Pharmacologically restoring Mmp inhibition in timp null mutants corrects bone morphogenetic protein (BMP) signaling and synaptic properties. Genetically restoring BMP signaling in timp null mutants corrects NMJ structure and motor function. Thus, Timp inhibition of Mmp proteolytic activity restricts BMP trans-synaptic signaling to coordinate synaptogenesis.