Fatty acid metabolism plays an important role in brain development and function. Mutations in acyl-CoA synthetase long-chain family member 4 (ACSL4), which converts long-chain fatty acids to acyl-CoAs, result in nonsyndromic X-linked mental retardation. ACSL4 is highly expressed in the hippocampus, a structure critical for learning and memory. However, the underlying mechanism by which mutations of ACSL4 lead to mental retardation remains poorly understood. We report here that dAcsl, the Drosophila ortholog of ACSL4 and ACSL3, inhibits synaptic growth by attenuating BMP signaling, a major growth-promoting pathway at neuromuscular junction (NMJ) synapses. Specifically, dAcsl mutants exhibited NMJ overgrowth that was suppressed by reducing the doses of the BMP pathway components, accompanied by increased levels of activated BMP receptor Thickveins (Tkv) and phosphorylated mothers against decapentaplegic (Mad), the effector of the BMP signaling at NMJ terminals. In addition, Rab11, a small GTPase involved in endosomal recycling, was mislocalized in dAcsl mutant NMJs, and the membrane association of Rab11 was reduced in dAcsl mutant brains. Consistently, the BMP receptor Tkv accumulated in early endosomes but reduced in recycling endosomes in dAcsl mutant NMJs. dAcsl was also required for the recycling of photoreceptor rhodopsin in the eyes, implying a general role for dAcsl in regulating endocytic recycling of membrane receptors. Importantly, expression of human ACSL4 rescued the endocytic trafficking and NMJ phenotypes of dAcsl mutants. Together, our results reveal a novel mechanism whereby dAcsl facilitates Rab11-dependent receptor recycling and provide insights into the pathogenesis of ACSL4-related mental retardation.