Glia mediate a vast array of cellular processes and are critical for nervous system development and function. Despite their immense importance in neurobiology, glia remain understudied and the molecular mechanisms that direct their differentiation are poorly understood. Rap/Fzr is the Drosophila homolog of the mammalian Cdh1, a regulatory subunit of the anaphase-promoting complex/cyclosome (APC/C). APC/C is an E3 ubiquitin ligase complex well characterized for its role in cell cycle progression. In this study, we have uncovered a novel cellular role for Rap/Fzr. Loss of rap/fzr function leads to a marked increase in the number of glia in the nervous system of third instar larvae. Conversely, ectopic expression of UAS-rap/fzr, driven by repo-GAL4, results in the drastic reduction of glia. Data from clonal analyses using the MARCM technique show that Rap/Fzr regulates the differentiation of surface glia in the developing larval nervous system. Our genetic and biochemical data further indicate that Rap/Fzr regulates glial differentiation through its interaction with Loco, a regulator of G-protein signaling (RGS) protein and a known effector of glia specification. We propose that Rap/Fzr targets Loco for ubiquitination, thereby regulating glial differentiation in the developing nervous system.