The endoplasmic reticulum (ER)-resident transmembrane protein kinase/RNase Ire1 is a conserved sensor of the cellular unfolded protein response and has been implicated in lipid homeostasis, including lipid synthesis and transport, across species. Here we report a novel catabolic role of Ire1 in regulating lipid mobilization in Drosophila. We found that Ire1 is activated by nutrient deprivation, and, importantly, fat body-specific Ire1 deficiency leads to increased lipid mobilization and sensitizes flies to starvation, whereas fat body Ire1 overexpression results in the opposite phenotypes. Genetic interaction and biochemical analyses revealed that Ire1 regulates lipid mobilization by promoting Xbp1s-associated FoxO degradation and suppressing FoxO-dependent lipolytic programs. Our results demonstrate that Ire1 is a catabolic sensor and acts through the Xbp1s-FoxO axis to hamper the lipolytic response during chronic food deprivation. These findings offer new insights into the conserved Ire1 regulation of lipid homeostasis.