Presynaptic homeostatic plasticity (PHP) controls synaptic transmission in organisms from Drosophila to human and is hypothesized to be relevant to the cause of human disease. However, the underlying molecular mechanisms of PHP are just emerging and direct disease associations remain obscure. In a forward genetic screen for mutations that block PHP we identified mctp (Multiple C2 Domain Proteins with Two Transmembrane Regions). Here we show that MCTP localizes to the membranes of the endoplasmic reticulum (ER) that elaborate throughout the soma, dendrites, axon and presynaptic terminal. Then, we demonstrate that MCTP functions downstream of presynaptic calcium influx with separable activities to stabilize baseline transmission, short-term release dynamics and PHP. Notably, PHP specifically requires the calcium coordinating residues in each of the three C2 domains of MCTP. Thus, we propose MCTP as a novel, ER-localized calcium sensor and a source of calcium-dependent feedback for the homeostatic stabilization of neurotransmission.