At the Drosophila neuromuscular junction, inhibition of postsynaptic glutamate receptors activates retrograde signaling that precisely increases presynaptic neurotransmitter release to restore baseline synaptic strength. However, the nature of the underlying postsynaptic induction process remains enigmatic. Here, we design a forward genetic screen to discover factors in the postsynaptic compartment necessary to generate retrograde homeostatic signaling. This approach identified insomniac (inc), a putative adaptor for the Cullin-3 (Cul3) ubiquitin ligase complex, which together with Cul3 is essential for normal sleep regulation. Interestingly, we find that Inc and Cul3 rapidly accumulate at postsynaptic compartments following acute receptor inhibition and are required for a local increase in mono-ubiquitination. Finally, we show that Peflin, a Ca2+-regulated Cul3 co-adaptor, is necessary for homeostatic communication, suggesting a relationship between Ca2+ signaling and control of Cul3/Inc activity in the postsynaptic compartment. Our study suggests that Cul3/Inc-dependent mono-ubiquitination, compartmentalized at postsynaptic densities, gates retrograde signaling and provides an intriguing molecular link between the control of sleep and homeostatic plasticity at synapses.