Increasing evidence suggests that dysregulation of lipid metabolism is associated with neurodegeneration in retinal diseases such as age-related macular degeneration and in brain disorders such as Alzheimer's and Parkinson's diseases. Lipid storage organelles (lipid droplets, LDs), accumulate in many cell types in response to stress, and it is now clear that LDs function not only as lipid stores but also as dynamic regulators of the stress response. However, whether these LDs are always protective or can also be deleterious to the cell is unknown. Here, we investigated the consequences of LD accumulation on retinal cell homeostasis under physiological and stress conditions in Drosophila and in mice. In wild-type Drosophila, we show that dFatp is required and sufficient for expansion of LD size in retinal pigment cells (RPCs) and that LDs in RPCs are required for photoreceptor survival during aging. Similarly, in mice, LD accumulation induced by RPC-specific expression of human FATP1 was non-toxic and promoted mitochondrial energy metabolism in RPCs and non-autonomously in photoreceptor cells. In contrast, the inhibition of LD accumulation by dFatp knockdown suppressed neurodegeneration in Aats-metFB Drosophila mutants, which carry elevated levels of reactive oxygen species (ROS). This suggests that abnormal turnover of LD may be toxic for photoreceptors cells of the retina under oxidative stress. Collectively, these findings indicate that FATP-mediated LD formation in RPCs promotes RPC and neuronal homeostasis under physiological conditions but could be deleterious for the photoreceptors under pathological conditions.