Growth and maturation are coordinated processes in all animals. Integration of internal cues, such as signalling pathways, with external cues, such as nutritional status, is paramount for an orderly progression of development and growth. In Drosophila, this involves insulin and steroid signalling, but the underlying mechanisms and their coordination are incompletely understood. We show that bioactive 20-hydroxyecdysone production by the enzyme Shade in the fat body is a nutrient-dependent process. We demonstrate that under fed conditions, Shade plays a role in growth control. We identify the trachea and the insulin-producing cells in the brain as direct targets through which 20-hydroxyecdysone regulates insulin signalling. The identification of trachea-dependent regulation of insulin signalling exposes an important variable that may have been overlooked in other studies focusing on insulin signalling in Drosophila Our findings provide a potentially conserved, novel mechanism by which nutrition can modulate steroid hormone bioactivation, reveal an important caveat of a commonly used transgenic tool to study insulin-producing cell function, and yield further insights into how steroid and insulin signalling are coordinated during development to regulate growth and developmental timing.