Across metazoans, cell cycle progression is regulated by E2F family transcription factors that can function as either transcriptional activators or repressors. For decades, the Drosophila E2F family has been viewed as a streamlined RB/E2F network, consisting of one activator (dE2F1) and one repressor (dE2F2). Here, we report that an uncharacterized isoform of dE2F1, hereon called dE2F1b, plays an important function during development and is functionally distinct from the widely-studied dE2F1 isoform, dE2F1a. dE2F1b contains an additional exon that inserts 16 amino acids to the evolutionarily conserved Marked Box domain. Analysis of de2f1b-specific mutants generated via CRISPR/Cas9 indicates that dE2F1b is a critical regulator of the cell cycle during development. This is particularly evident in endocycling salivary glands in which a tight control of dE2F1 activity is required. Interestingly, close examination of mitotic tissues such as eye and wing imaginal discs suggests that dE2F1b plays a repressive function as cells exit from the cell cycle. We also provide evidence demonstrating that dE2F1b differentially interacts with RBF1 and alters the recruitment of RBF1 and dE2F1 to promoters. Collectively, our data suggest that dE2F1b is a novel member of the E2F family, revealing a previously unappreciated complexity in the Drosophila RB/E2F network.