The heparan sulfate proteoglycan syndecans are transmembrane proteins involved in multiple physiological processes, including cell-matrix adhesion and inflammation. Recent evidence from model systems and humans suggest that syndecans have a role in energy balance and nutrient metabolism regulation. However, much remains to be learned about the mechanisms through which syndecans influence these phenotypes. Previously, we reported that Drosophila melanogaster Syndecan (Sdc) mutants had reduced metabolic activity compared to controls. Here, we knocked down endogenous Sdc expression in the fat body (the functional equivalent of mammalian adipose tissue and liver) to investigate whether the effects on metabolism originate from this tissue. We found that knocking down Sdc in the fat body leads to flies with higher levels of glycogen and fat and that survive longer during starvation, likely due to their extra energy reserves and an increase in gluconeogenesis. However, compared to control flies, they are also more sensitive to environmental stresses (e.g. bacterial infection and cold) and have reduced metabolic activity under normal feeding conditions. Under the same conditions, fat-body Sdc reduction enhances expression of genes involved in glyceroneogenesis and gluconeogenesis and induces a drastic decrease in phosphorylation levels of AKT and extracellular signal regulated kinase 1/2 (ERK1/2). Altogether, these findings strongly suggest that Drosophila fat body Sdc is involved in a mechanism that shifts resources to different physiological functions according to nutritional status.