Endogenous neuropeptides are uniquely poised to regulate neuronal activity and behavior across multiple timescales. Traditional studies ascribing neuropeptide contributions to behavior lack spatiotemporal precision. The endogenous opioid dynorphin is highly enriched in the dorsal striatum, known to be critical for regulating goal-directed behavior. However, the locus, the precise timescale, or functional role of endogenous dyn-KOR signaling on goal-directed behavior is unknown. Here, we report that local, time-locked dynorphin release from the dorsomedial striatum is necessary and sufficient for goal-directed behavior using a suite of high resolution modern approaches including in vivo two-photon imaging, neuropeptide biosensor detection, conditional deletions and time-locked optogenetic manipulations. We discovered that glutamatergic axon terminals from the basolateral amygdala evoke striatal dynorphin release, resulting in retrograde presynaptic GPCR inhibition during behavior. Collectively, our findings isolate a causal role for endogenous neuropeptide release at rapid timescales, and subsequent GPCR activity for tuning and promoting fundamental goal-directed behaviors.