Microtubules (MTs) are crucial for diverse biological processes including cell division, cell growth and motility, intracellular transport and the maintenance of cell shape. MT abnormalities are associated with neurodevelopmental and neurodegenerative diseases such as hereditary spastic paraplegia. Among many MT regulators, katanin was the first identified MT-severing protein, but its neuronal functions have not yet been examined in a multicellular organism. Katanin consists of two subunits; the catalytic subunit katanin 60 contains an AAA (ATPases associated with a variety of cellular activities) domain and breaks MT fibers while hydrolyzing ATP, whereas katanin 80 is a targeting and regulatory subunit. To dissect the in vivo functions of Katanin, we generated mutations in Drosophila Katanin 60 and manipulated its expression in a tissue-specific manner. Null mutants of Katanin 60 are pupal lethal, demonstrating that it is essential for viability. Loss-of-function mutants of Katanin 60 showed excess satellite boutons, reduced neurotransmission efficacy, and more enlarged cisternae at neuromuscular junctions. In peripheral sensory neurons, loss of Katanin 60 led to increased elaboration of dendrites, whereas overexpression of Katanin 60 resulted in the opposite. Genetic interaction analyses indicated that increased levels of MT acetylation increase its susceptibility to Katanin-mediated severing in neuronal and non-neuronal systems. Taken together, our results demonstrate for the first time that Katanin 60 is required for the normal development of neuromuscular synapses and dendrites.