The cellular localization of the peptide neurotransmitter proctolin was determined for larvae of the fruitfly Drosophila melanogaster. Proctolin was recovered from the CNS, hindgut, and segmental bodywall using reverse-phase HPLC, and characterized by bioassay, immunoassay, and enzymatic analysis. A small, stereotyped population of proctolin-immunoreactive neurons was found in the larval CNS. Several of the identified neurons may be efferents. In the periphery, proctolin-immunoreactive neuromuscular endings were identified on both visceral and skeletal muscle fibers. On the hindgut, the neuropeptide is associated with endings on intrinsic circular muscle fibers. We propose that the hindgut muscle fibers are innervated by central neurons homologous to previously described proctolinergic efferents of grasshoppers. The segmental bodywall innervation consists of a pattern of segment-specific junctions on several singly identifiable muscle fibers. While it is generally accepted that Drosophila muscle fibers are innervated by glutamatergic motoneurons, our data indicate that a specialized subset of muscle fibers are also innervated by peptidergic efferents.