Drosophila is a powerful model for neuroscientists, but physiological techniques have not kept pace with advances in molecular genetics. We introduce a reliable assay for intracellular calcium dynamics in Drosophila larval motor neuron terminals, and a new physiological solution that improves the longevity of the larval preparation. By loading calcium indicators into motor neuron terminals through cut axons, we obtained a high signal-to-noise ratio with confocal microscopy, and good temporal resolution of calcium-dependent fluorescence changes. We provide an estimate for the resting intracellular calcium concentration, the first description of calcium kinetics for a single action potential (AP), and improved resolution of calcium kinetics during AP trains. The very rapid decay of the calcium signal following a single AP (tau ~60 ms) indicates a previously unreported fast calcium extrusion mechanism in Drosophila motor neuron terminals well suited for sustaining physiological processes during the high rates of impulse activity which drive locomotor activity.