The BMP pathway is essential for scaling of the presynaptic motoneuron arbor to the postsynaptic muscle cell at the Drosophila neuromuscular junction (NMJ). Genetic analyses indicate that the muscle is the BMP-sending cell and the motoneuron is the BMP-receiving cell. Nevertheless, it is unclear how this directionality is established as Glass bottom boat (Gbb), the known BMP ligand, is active in motoneurons. We demonstrate that crimpy (cmpy) limits neuronal Gbb activity to permit appropriate regulation of NMJ growth. cmpy was identified in a screen for motoneuron-expressed genes and encodes a single-pass transmembrane protein with sequence homology to vertebrate Cysteine-rich transmembrane BMP regulator 1 (Crim1). We generated a targeted deletion of the cmpy locus and find that loss-of-function mutants exhibit excessive NMJ growth. In accordance with its expression profile, tissue-specific rescue experiments indicate that cmpy functions neuronally. The overgrowth in cmpy mutants depends on the activity of the BMP type II receptor Wishful thinking, arguing that Cmpy acts in the BMP pathway upstream of receptor activation and raising the possibility that it inhibits Gbb activity in motoneurons. Indeed, the cmpy mutant phenotype is strongly suppressed by RNAi-mediated knockdown of Gbb in motoneurons. Furthermore, Cmpy physically interacts with the Gbb precursor protein, arguing that Cmpy binds Gbb prior to the secretion of mature ligand. These studies demonstrate that Cmpy restrains Gbb activity in motoneurons. We present a model whereby this inhibition permits the muscle-derived Gbb pool to predominate at the NMJ, thus establishing the retrograde directionality of the pro-growth BMP pathway.