In Drosophila, the fat body (FB), a functional analog of the vertebrate adipose tissue, is the nutrient sensor that conveys the nutrient status to the insulin-producing cells (IPCs) in the fly brain to release Drosophila insulin-like peptides (Dilps). Dilp secretion in turn regulates energy balance and promotes systemic growth. We identify Unpaired 2 (Upd2), a protein with similarities to type I cytokines, as a secreted factor produced by the FB in the fed state. When upd2 function is perturbed specifically in the FB, it results in a systemic reduction in growth and alters energy metabolism. Upd2 activates JAK/STAT signaling in a population of GABAergic neurons that project onto the IPCs. This activation relieves the inhibitory tone of the GABAergic neurons on the IPCs, resulting in the secretion of Dilps. Strikingly, we find that human Leptin can rescue the upd2 mutant phenotypes, suggesting that Upd2 is the functional homolog of Leptin.