Mitochondrial mass and activity must be adapted to tissue function, cellular growth and nutrient availability. In mammals, the related transcriptional coactivators PGC-1alpha, PGC-1beta and PRC regulate multiple metabolic functions, including mitochondrial biogenesis. However, we know relatively little about their respective roles in vivo. Here we show that the Drosophila PGC-1 family homologue, Spargel, is required for the expression of multiple genes encoding mitochondrial proteins. Accordingly, spargel mutants showed mitochondrial respiration defects when complex II of the electron transport chain was stimulated. Spargel, however, was not limiting for mitochondrial mass, but functioned in this respect redundantly with Delg, the fly NRF-2alpha/GABPalpha homologue. More importantly, in the larval fat body, Spargel mediated mitochondrial activity, cell growth and transcription of target genes in response to insulin signalling. In this process, Spargel functioned in parallel to the insulin-responsive transcription factor, dFoxo, and provided a negative feedback loop to fine-tune insulin signalling. Taken together, our data place Spargel at a nodal point for the integration of mitochondrial activity to tissue and organismal metabolism and growth.