Calcium-activated protein for secretion (CAPS) is proposed to play an essential role in Ca2+-regulated dense-core vesicle exocytosis in vertebrate neuroendocrine cells. Here we report the cloning, mutation, and characterization of the Drosophila ortholog (dCAPS). Null dCAPS mutants display locomotory deficits and complete embryonic lethality. The mutant NMJ reveals a 50% loss in evoked glutamatergic transmission, and an accumulation of synaptic vesicles at active zones. Importantly, dCAPS mutants display a highly specific 3-fold accumulation of dense-core vesicles in synaptic terminals, which was not observed in mutants that completely arrest synaptic vesicle exocytosis. Targeted transgenic CAPS expression in identified motoneurons fails to rescue dCAPS neurotransmission defects, demonstrating a cell nonautonomous role in synaptic vesicle fusion. We conclude that dCAPS is required for dense-core vesicle release and that a dCAPS-dependent mechanism modulates synaptic vesicle release at glutamatergic synapses.