The mitochondrion is a highly dynamic organelle that is critical for energy production and numerous metabolic processes. Drosophila Chchd2, a homolog of the human disease-related genes CHCHD2 and CHCHD10, encodes a mitochondrial protein. In this study, we found that loss of Chchd2 in flies resulted in progressive degeneration of photoreceptor cells and reduced muscle integrity. In the flight muscles of adult Chchd2 mutants, some mitochondria exhibited curling cristae and a reduced number of cristae compared to those of controls. Overexpression of Chchd2 carrying human disease-related point mutations failed to fully rescue the mitochondrial defects in Chchd2 mutants. In fat body cells, loss of Chchd2 resulted in fragmented mitochondria that could be partially rescued by Marf overexpression and enhanced by Opa1 RNAi. The expression level of Opa1 was reduced in Chchd2 mutants and increased when Chchd2 was overexpressed. The chaperone-like protein P32 co-immunoprecipitated with Chchd2 and YME1L, a protease known to processes human OPA1. Moreover, the interaction between P32 and YME1L enhanced YME1L activity and promoted Opa1 degradation. Finally, Chchd2 stabilized Opa1 by competing with P32 for YME1L binding. We propose a model whereby Chchd2 regulates mitochondrial morphology and tissue homeostasis by fine-tuning the levels of OPA1.