Dietary restriction (DR) is one of the most robust lifespan-extending interventions in animals. The beneficial effects of DR involve a metabolic adaptation toward increased triglyceride usage. The regulatory mechanism and the tissue specificity of this metabolic switch remain unclear. Here, we show that the IRE1/XBP1 endoplasmic reticulum (ER) stress signaling module mediates metabolic adaptation upon DR in flies by promoting triglyceride synthesis and accumulation in enterocytes (ECs) of the Drosophila midgut. Consistently, IRE1/XBP1 function in ECs is required for increased longevity upon DR. We further identify sugarbabe, a Gli-like zinc-finger transcription factor, as a key mediator of the IRE1/XBP1-regulated induction of de novo lipogenesis in ECs. Overexpression of sugarbabe rescues metabolic and lifespan phenotypes of IRE1 loss-of-function conditions. Our study highlights the critical role of metabolic adaptation of the intestinal epithelium for DR-induced lifespan extension and explores the IRE1/XBP1 signaling pathway regulating this adaptation and influencing lifespan.