Quantal size is a fundamental parameter controlling the strength of synaptic transmission. The transmitter content of synaptic vesicles is one mechanism that can affect the physiological response to the release of a single vesicle. At glutamatergic synapses, vesicular glutamate transporters (VGLUTs) are responsible for filling synaptic vesicles with glutamate. To investigate how VGLUT expression can regulate synaptic strength in vivo, we have identified the Drosophila vesicular glutamate transporter, which we name DVGLUT. DVGLUT mRNA is expressed in glutamatergic motoneurons and a large number of interneurons in the Drosophila CNS. DVGLUT protein resides on synaptic vesicles and localizes to the presynaptic terminals of all known glutamatergic neuromuscular junctions as well as to synapses throughout the CNS neuropil. Increasing the expression of DVGLUT in motoneurons leads to an increase in quantal size that is accompanied by an increase in synaptic vesicle volume. At synapses confronted with increased glutamate release from each vesicle, there is a compensatory decrease in the number of synaptic vesicles released that maintains normal levels of synaptic excitation. These results demonstrate that (1) expression of DVGLUT determines the size and glutamate content of synaptic vesicles and (2) homeostatic mechanisms exist to attenuate the excitatory effects of excess glutamate release.