Studies in cell-free systems and the lamprey giant synapse have implicated crucial roles for amphiphysin and endophilin in synaptic transmission. However, null mutants at the amphiphysin locus of Drosophila are viable and have no demonstrable synaptic vesicle-recycling defect. This has necessitated a re-examination of the role of Src homology 3 domain-containing proteins in synaptic vesicle recycling. In this report, we show that endophilin-deficient eye clones in Drosophila have an altered electroretinogram. A characteristic of this defect is its aggravation during heightened visual stimulation. It is shown that endophilin is primarily required in the nervous system. Decreased endophilin activity results in alterations in the neuromuscular junction structure and physiology. Immunofluorescence studies show colocalization of endophilin with dynamin consistent with a possible role in synaptic vesicle recycling.