The conserved Eph receptors and their Ephrin ligands regulate a number of developmental processes, including axon guidance. In contrast to the large vertebrate Eph/Ephrin family, Drosophila has a single Eph receptor and a single Ephrin ligand, both of which are expressed within the developing nervous system. Here, we show that Eph and Ephrin can act as a functional receptor-ligand pair in vivo. Surprisingly, and in contrast to previous results using RNA-interference techniques, embryos completely lacking Eph function show no obvious axon guidance defects. However, Eph/Ephrin signaling is required for proper development of the mushroom body. In wild type, mushroom body neurons bifurcate and extend distinct branches to different target areas. In Eph mutants, these neurons bifurcate normally, but in many cases the dorsal branch fails to project to its appropriate target area. Thus, Eph/Ephrin signaling acts to guide a subset of mushroom body branches to their correct synaptic targets.