Use-dependent downregulation of neuronal activity (negative feedback) can act as a homeostatic mechanism to maintain neuronal activity at a particular specified value. Disruption of this negative feedback might lead to neurological pathologies, such as epilepsy, but the precise mechanisms by which this feedback can occur remain incompletely understood. At one glutamatergic synapse, the Drosophila neuromuscular junction, a mutation in the group II metabotropic glutamate receptor gene (DmGluRA) increased motor neuron excitability by disrupting an autocrine, glutamate-mediated negative feedback. We show that DmGluRA mutations increase neuronal excitability by preventing PI3 kinase (PI3K) activation and consequently hyperactivating the transcription factor Foxo. Furthermore, glutamate application increases levels of phospho-Akt, a product of PI3K signaling, within motor nerve terminals in a DmGluRA-dependent manner. Finally, we show that PI3K increases both axon diameter and synapse number via the Tor/S6 kinase pathway, but not Foxo. In humans, PI3K and group II mGluRs are implicated in epilepsy, neurofibromatosis, autism, schizophrenia, and other neurological disorders; however, neither the link between group II mGluRs and PI3K, nor the role of PI3K-dependent regulation of Foxo in the control of neuronal excitability, had been previously reported. Our work suggests that some of the deficits in these neurological disorders might result from disruption of glutamate-mediated homeostasis of neuronal excitability.