Tissue-specific loss-of-function (LOF) analysis is an essential approach for characterizing gene function. Here we describe an efficient CRISPR-mediated tissue-restricted mutagenesis (CRISPR-TRiM) method for ablating gene function in Drosophila. This binary system consists of a tissue-specific Cas9 and a ubiquitously expressed multi-guide RNA (gRNA) transgene. To facilitate the construction of these components, we developed convenient tools for generating and evaluating enhancer-driven Cas9 lines, identified a multi-gRNA design that is highly efficient in mutagenizing somatic cells, and established an assay for testing the efficiency of multi-gRNAs in creating double-stranded breaks. We found that excision of genomic DNA induced by two gRNAs is infrequent in somatic cells, while indels more reliably cause tissue-specific LOF. Furthermore, we show that enhancer-driven Cas9 is less cytotoxic yet results in more complete gene removal than Gal4-driven Cas9 in larval neurons. Finally, we demonstrate that CRISPR-TRiM efficiently unmasks redundant gene functions in neuronal morphogenesis. Importantly, two Cas9 transgenes that turn on with different timings in the neuronal lineage revealed the extent to which gene products persist in cells after tissue-specific gene knockout. These CRISRPR tools can be applied to analyze tissue-specific gene function in many biological processes.