Metabolites are increasingly appreciated for their roles as signaling molecules. To dissect the roles of metabolites, it is essential to understand their signaling pathways and their enzymatic regulations. From an RNA interference (RNAi) screen for regulators of intestinal stem cell (ISC) activity in the Drosophila midgut, we identified adenosine receptor (AdoR) as a top candidate gene required for ISC proliferation. We demonstrate that Ras/MAPK and Protein Kinase A (PKA) signaling act downstream of AdoR and that Ras/MAPK mediates the major effect of AdoR on ISC proliferation. Extracellular adenosine, the ligand for AdoR, is a small metabolite that can be released by various cell types and degraded in the extracellular space by secreted adenosine deaminase. Interestingly, down-regulation of adenosine deaminase-related growth factor A (Adgf-A) from enterocytes is necessary for extracellular adenosine to activate AdoR and induce ISC overproliferation. As Adgf-A expression and its enzymatic activity decrease following tissue damage, our study provides important insights into how the enzymatic regulation of extracellular adenosine levels under tissue-damage conditions facilitates ISC proliferation.