Sir2 is an evolutionarily conserved NAD+ dependent protein. Although, SIRT1 has been implicated to be a key regulator of fat and glucose metabolism in mammals, the role of Sir2 in regulating organismal physiology, in invertebrates, is unclear. Drosophila has been used to study evolutionarily conserved nutrient sensing mechanisms, however, the molecular and metabolic pathways downstream to Sir2 (dSir2) are poorly understood. Here, we have knocked down endogenous dSir2 in a tissue specific manner using gene-switch gal4 drivers. Knockdown of dSir2 in the adult fatbody leads to deregulated fat metabolism involving altered expression of key metabolic genes. Our results highlight the role of dSir2 in mobilizing fat reserves and demonstrate that its functions in the adult fatbody are crucial for starvation survival. Further, dSir2 knockdown in the fatbody affects dilp5 (insulin-like-peptide) expression, and mediates systemic effects of insulin signaling. This report delineates the functions of dSir2 in the fatbody and muscles with systemic consequences on fat metabolism and insulin signaling. In conclusion, these findings highlight the central role that fatbody dSir2 plays in linking metabolism to organismal physiology and its importance for survival.