The fly trachea is the equivalent of the mammalian lung and is a useful model for human respiratory diseases. However, little is known about the molecular mechanisms underlying tracheal air filling during larval development. In this study, we discover that PTPMT1 has a function in tracheal air filling. PTPMT1 is a widely conserved, ubiquitously expressed mitochondrial phosphatase. To reveal PTPMT1's functions in genetically tractable invertebrates and whether those functions are tissue specific, we generate a Drosophila model of PTPMT1 depletion. We find that fly PTPMT1 mutants show impairments in tracheal air filling and subsequent activation of innate immune responses. On a cellular level, these defects are preceded by aggregation of mitochondria within the tracheal epithelial cells. Our work demonstrates a cell-type-specific role for PTPMT1 in fly tracheal epithelial cells to support air filling and to prevent immune activation. The establishment of this model will facilitate exploration of PTPMT1's physiological functions in vivo.