Endocytosis regulates the retrieval of synaptic membranes and the trafficking of growth signaling receptors. While Drosophila endocytic mutants show synaptic overgrowth at the neuromuscular junctions (NMJs), the signaling pathways by which endocytosis restricts synapse growth remain poorly understood. Here, we demonstrate that sigma2-adaptin, one of the obligate subunits of the AP2 complex, facilitates the degradation and trafficking of E3-ubiquitin ligase Highwire (Hiw)/PHR1 and inhibits the c-Jun N-terminal kinase (JNK) signaling. This function of sigma2-adaptin is independent of its Bone Morphogenetic Protein (BMP) signaling regulation. Loss of sigma2-adaptin leads to Hiw accumulation and mislocalization in the neuronal cell body, leading to elevated MAP3K Wallenda levels. Stabilizing Hiw by expressing Rae1 or genetically blocking the JNK signaling suppresses the synaptic overgrowth defects observed in sigma2-adaptin mutants. Remarkably, blocking BMP and JNK signaling pathways suppressed the synaptic overgrowth observed in the sigma2-adaptin mutant to the wild-type levels. Finally, we show that loss of Rab11 but not Rab5 or Rab7 leads to accumulation/mislocalization of Hiw in the neuronal cell body akin to sigma2-adaptin mutants. We propose a model in which endocytosis regulates Rab11-mediated Hiw trafficking and attenuates JNK signaling in a pathway parallel to the BMP signaling to restrict synaptic growth.