The CNS of bilateral symmetric organisms is characterized by intensive contralateral axonal connections. Genetic screens in Drosophila have identified only a few genes required for guiding commissural growth cones toward and across the midline. Two evolutionarily conserved signaling molecules, Netrin and Slit, are expressed in the CNS midline cells. Netrin acts primarily as an attractive signaling cue, whereas Slit mediates repulsive functions. Here, we describe a detailed analysis of the Drosophila gene schizo, which is required for commissure formation. schizo leads to a commissural phenotype reminiscent of netrin mutant embryos. Double-mutant analyses indicate that Netrin and Schizo act independently. The schizo mutant phenotype can be suppressed by either expressing netrin in the CNS midline cells or by a reduction of the slit gene dose, indicating that the balance of attractive and repulsive signaling is impaired in schizo mutants. Overexpression of the schizo RNA in the CNS midline using the GAL4/UAS system leads to a slit phenocopy, suggesting that schizo primarily antagonizes Slit signaling. This is further supported by cell type-specific rescue experiments. The schizo gene generates at least two proteins containing a conserved Sec7 and a pleckstrin homology domain (PH) characteristic for guanine nucleotide exchange factors (GEF) acting on ARF GTPases, which are known to regulate endocytosis. In support of the notion that schizo regulates Slit expression via endocytosis, we found that block of endocytosis leads to a schizo-like phenotype. We thus propose that the balance of the two signaling cues Netrin and Slit can be regulated, controlling membrane dynamics.