Highwire (Hiw), a putative RING finger E3 ubiquitin ligase, negatively regulates synaptic growth at the neuromuscular junction (NMJ) in Drosophila. hiw mutants have dramatically larger synaptic size and increased numbers of synaptic boutons. Here we show that Hiw binds to the Smad protein Medea (Med). Med is part of a presynaptic bone morphogenetic protein (BMP) signaling cascade consisting of three receptor subunits, Wit, Tkv, and Sax, in addition to the Smad transcription factor Mad. When compared to wild-type, mutants of BMP signaling components have smaller NMJ size, reduced neurotransmitter release, and aberrant synaptic ultrastructure. BMP signaling mutants suppress the excessive synaptic growth in hiw mutants. Activation of BMP signaling, which in wild-type does not cause additional growth, in hiw mutants does lead to further synaptic expansion. These results reveal a balance between positive BMP signaling and negative regulation by Highwire, governing the growth of neuromuscular synapses.