Although modulation of presynaptic terminal excitability can profoundly affect transmission efficacy, how excitability along axonal terminal branches is regulated requires further investigations. We performed focal patch recording in Drosophila larval neuromuscular junctions (NMJs) to monitor the activity of individual synaptic boutons along the presynaptic terminal. Analysis of the learning mutant rutabaga (rut) suggests a tight regulation of presynaptic terminal excitability by rut adenylyl cyclase (AC) that is responsible for Ca2+/calmodulin-dependent cAMP synthesis. Focal excitatory junctional currents (ejcs) demonstrated that disrupted cAMP metabolism in rut mutant boutons leads to decreased transmitter release, coupled with temporal dispersion and amplitude fluctuation of ejcs during repetitive activity. Strikingly, rut motor terminals displayed greatly increased variability among corresponding terminal branches of identified NMJs in different preparations. However, boutons throughout single terminal branches were relatively uniform in either WT or rut mutant larvae. The use of electrotonic depolarization to directly evoke transmitter release from axonal terminals revealed that variability in neurotransmission originated from varying degrees of weakened excitability in rut terminals. Pharmacological treatments and axonal action potential recordings raised the possibility that defective rut AC resulted in reduced Ca2+ currents in the nerve terminal. Thus, our data indicate that rut AC not only affects transmitter release machinery, but also plays a previously unsuspected role in local excitability control, both contributing to transmission level and precision along the entire axonal terminal.