Insulin and target of rapamycin (TOR) signaling pathways converge to maintain growth so a proportionate body form is attained. Insufficiency in either insulin or TOR results in developmental growth defects due to low ATP level. Spargel is the Drosophila homolog of PGC-1, which is an omnipotent transcriptional coactivator in mammals. Like its mammalian counterpart, Spargel/dPGC-1 is recognized for its role in energy metabolism through mitochondrial biogenesis. An earlier study demonstrated that Spargel/dPGC-1 is involved in the insulin-TOR signaling, but a comprehensive analysis is needed to understand exactly which step of this pathway Spargel/PGC-1 is essential. Using genetic epistasis analysis, we demonstrated that a Spargel gain of function can overcome the TOR and S6K mediated cell size and cell growth defects in a cell autonomous manner. Moreover, the tissue-restricted phenotypes of TOR and S6k mutants are rescued by Spargel overexpression. We have further elucidated that Spargel gain of function sets back the mitochondrial numbers in growth-limited TOR mutant cell clones, which suggests a possible mechanism for Spargel action on cells and tissue to attain normal size. Finally, excess Spargel can ameliorate the negative effect of FoxO overexpression only to a limited extent, which suggests that Spargel does not share all of the FoxO functions and consequently cannot significantly rescue the FoxO phenotypes. Together, our observation established that Spargel/dPGC-1 is indeed a terminal effector in the insulin-TOR pathway operating below TOR, S6K, Tsc, and FoxO. This led us to conclude that Spargel should be incorporated as a new member of this growth-signaling pathway.