The proline-rich COOH-terminal region of dynamin binds various Src homology 3 (SH3) domain-containing proteins, but the physiological role of these interactions is unknown. In living nerve terminals, the function of the interaction with SH3 domains was examined. Amphiphysin contains an SH3 domain and is a major dynamin binding partner at the synapse. Microinjection of amphiphysin’s SH3 domain or of a dynamin peptide containing the SH3 binding site inhibited synaptic vesicle endocytosis at the stage of invaginated clathrin-coated pits, which resulted in an activity-dependent distortion of the synaptic architecture and a depression of transmitter release. These findings demonstrate that SH3-mediated interactions are required for dynamin function and support an essential role of clathrin-mediated endocytosis in synaptic vesicle recycling.