ABSTRACT Background Like most animals, insects rely on their highly sensitive olfactory systems for survival. Olfaction plays a primary role in finding food and mates as well as in the avoidance of noxious chemicals and predators. Insect olfactory neurons typically express an odor-specific odorant receptor (OR) along with Orco, the olfactory co-receptor. Orco binds ORs and permits their trafficking to the ciliated dendrites of antennal olfactory sensory neurons (OSNs), where together, they form heteromeric, ligand-gated, non-selective cation channels. Orco is highly conserved across insect orders, and one particularly well-conserved region of Orco is predicted to be a Calmodulin (CaM) binding site (CBS). In this study, we explore the relationship between Orco and CaM _in vivo_ in the olfactory neurons of _Drosophila melanogaster_. Results OSN-specific knock-down of CaM at the onset of OSN development dramatically reduces olfactory responsiveness and Orco trafficking to OSN dendrites without affecting OSN morphology. We next generated a series of Orco CBS mutants and used them to rescue the _Orco1_ null mutant. While wild type Orco rescues the _Orco1_ defect in trafficking ORs to OSN dendrites, all of the Orco CBS mutants remain stuck in the OSN cell bodies, precluding even the smallest odor-evoked response. Finally, we found CaM's modulation of OR trafficking is activity-dependent. Knock-down of CaM in all Orco-positive OSNs after OR expression is well-established has relatively little effect on olfactory responsiveness alone. When combined with an extended exposure to a given odor, however, this late-onset CaM knock-down dramatically reduces both olfactory sensitivity and dendritic Orco trafficking only in OSNs that respond to that specific odor. Conclusions In this study, we show Calmodulin regulates OR trafficking and olfactory responsiveness _in vivo_ in _Drosophila_ olfactory neurons via a highly conserved binding site on the olfactory co-receptor Orco. As CaM's modulation of Orco seems to be activity-dependent, we propose a model in which the CaM/Orco interaction allows insect OSNs to maintain appropriate dendritic levels of OR regardless of environmental odor concentration.