We have used the squid giant synapse to determine whether clathrin assembly by AP180 is important for synaptic vesicle endocytosis. The squid homolog of AP180 encodes a 751 amino acid protein with 40% sequence identity to mouse AP180. Alignment of squid AP180 with other AP180 homologs shows that amino acid identity was highest in the N-terminal inositide-binding domain of the protein and weakest in the C-terminal clathrin assembly domain. Recombinant squid AP180 was able to assemble clathrin in vitro, suggesting a conserved three-dimensional structure that mediates clathrin assembly despite the divergent primary sequence of the C-terminal domain. Microinjection of the C-terminal domains of either mouse or squid AP180 into the giant presynaptic terminal of squid enhanced synaptic transmission. Conversely, a peptide from the C-terminal domain of squid AP180 that inhibited clathrin assembly in vitro completely blocked synaptic transmission when it was injected into the giant presynaptic terminal. This inhibitory effect occurred over a time scale of minutes when the synapse was stimulated at low (0.03 Hz), physiological rates. Electron microscopic analysis revealed several structural changes consistent with the inhibition of synaptic vesicle endocytosis; peptide-injected terminals had far fewer synaptic vesicles, were depleted of coated vesicles, and had a larger plasma membrane perimeter than terminals injected with control solutions. In addition, the remaining synaptic vesicles were significantly larger in diameter. We conclude that the clathrin assembly domain of AP180 is important for synaptic vesicle recycling at physiological rates of activity and that assembly of clathrin by AP180 is necessary for maintaining a pool of releasable synaptic vesicles.