Exit from the cell cycle is essential for cells to initiate a terminal differentiation program during development, but what controls this transition is incompletely understood. In this paper, we demonstrate a regulatory link between mitochondrial fission activity and cell cycle exit in follicle cell layer development during Drosophila melanogaster oogenesis. Posterior-localized clonal cells in the follicle cell layer of developing ovarioles with down-regulated expression of the major mitochondrial fission protein DRP1 had mitochondrial elements extensively fused instead of being dispersed. These cells did not exit the cell cycle. Instead, they excessively proliferated, failed to activate Notch for differentiation, and exhibited downstream developmental defects. Reintroduction of mitochondrial fission activity or inhibition of the mitochondrial fusion protein Marf-1 in posterior-localized DRP1-null clones reversed the block in Notch-dependent differentiation. When DRP1-driven mitochondrial fission activity was unopposed by fusion activity in Marf-1-depleted clones, premature cell differentiation of follicle cells occurred in mitotic stages. Thus, DRP1-dependent mitochondrial fission activity is a novel regulator of the onset of follicle cell differentiation during Drosophila oogenesis.