During the development of a holometabolous insect such as Drosophila, specific group of cells in the larva survive during metamorphosis, unlike the other larval cells, and finally give rise to the differentiated adult structures. These cells, also known as Adult Progenitor Cells (APCs), maintain their multipotent capacity, differentially respond to hormonal and nutritional signals, survive the intrinsic and environmental stress and respond to the final differentiation cues. However, not much is known about the specific molecular mechanisms that account for their unique characteristics. Here we show that a specific Drosophila APC gene, headcase (hdc), has a dual role in the normal development of these cells. It acts at a systemic level by controlling the hormone ecdysone in the prothoracic gland and at the same time it acts locally as a tissue growth suppressor in the APC clusters, where it modulates the activity of the TOR pathway and promotes their survival by contributing in the regulation of the Unfolded Protein Response. We also show that hdc provides protection against stress in the APCs and that its ectopic expression in cells that do not usually express hdc can confer these cells with an additional stress protection. Hdc is the founding member of a group of homolog proteins identified from C. elegans to humans, where has been found associated with cancer progression. The finding that the Drosophila hdc is specifically expressed in progenitor cells and that it provides protection against stress opens up a new hypothesis to be explored regarding the role of the human Heca and its contribution to carcinogenesis.