The m-AAA proteases play a critical role in the proteostasis of inner mitochondrial membrane proteins, and mutations in the genes encoding these proteases cause severe incurable neurological diseases. To further explore the biological role of the m-AAA proteases and the pathological consequences of their deficiency, we used a genetic approach in the fruit fly Drosophila melanogaster to inactivate the ATPase family gene 3-like 2 (AFG3L2) gene, which encodes a critical component of the m-AAA proteases. We found that null alleles of Drosophila AFG3L2 die early in development, but partial inactivation of AFG3L2 using RNAi allowed survival to the late pupal and adult stages of development. Flies with partial inactivation of AFG3L2 exhibited behavioral defects, neurodegeneration, accumulation of unfolded mitochondrial proteins, and diminished respiratory chain (RC) activity. Further work revealed that the reduced RC activity was primarily a consequence of severely diminished mitochondrial transcription and translation. These defects were accompanied by activation of the mitochondrial unfolded protein response (mito-UPR) and autophagy. Overexpression of mito-UPR components partially rescued the AFG3L2-deficient phenotypes, indicating that protein aggregation partly accounts for the defects of AFG3L2-deficient animals. Our work suggests that strategies designed to activate mitochondrial stress pathways and mitochondrial gene expression could be therapeutic in the diseases caused by mutations in AFG3L2.