Background: Reduced insulin/insulin-like growth factor signaling (IIS) is a major cause of symmetrical intrauterine growth retardation (IUGR), an impairment in cell proliferation during prenatal development that results in global growth defects and mental retardation. In Drosophila, chico encodes the only insulin receptor substrate. Similar to other animal models of IUGR, chico mutants have defects in global growth and associative learning. However, the physiological and molecular bases of learning defects caused by chico mutations, and by symmetrical IUGR, are not clear. Results: In this study, we found that chico mutations impair memory-associated synaptic plasticity in the mushroom bodies (MBs), neural centers for olfactory learning. Mutations in chico reduce expression of the rutabaga-type adenylyl cyclase (rut), leading to decreased cAMP synthesis in the MBs. Expressing a rut(+) transgene in the MBs restores memory-associated plasticity and olfactory associative learning in chico mutants, without affecting growth. Thus chico mutations disrupt olfactory learning, at least in part, by reducing cAMP signaling in the MBs. Conclusions: Our results suggest that some cognitive defects associated with reduced IIS may occur, independently of developmental defects, from acute reductions in cAMP signaling.