During development, neural stem cells (NSCs) generate the neurons and glia of the central nervous system (CNS). They are known to proliferate within a specialised local microenvironment, called the niche. Recent work in mammals and insects indicates that lipid metabolism is important for regulating the divisions of NSCs. In Drosophila, powerful genetics and well characterised CNS architecture provide a useful model in which to study lipid metabolism in the glia of the NSC niche. Oxidative stress, characterised by high reactive oxygen species (ROS), induces lipid droplets (LDs) in niche glia. These LDs function to protect against ROS-induced lipid peroxidation, not only in the glia themselves but also in the neighbouring NSCs, called neuroblasts (NBs). In this thesis, I use cell type-specific genetic manipulations and labelled fatty acids (FAs) to investigate the origin of the lipid cargo in the triacylglyceride (TAG) core of glial LDs. I present multiple lines of evidence that oxidative stress triggers neurons to release FAs via a process that requires mitochondrial components. These extracellular FAs are then taken up by glia and trafficked via diacylglycerol acyltransferase 1 (DGAT1) into the TAG core of LDs. I used DGAT1 and adipose triglyceride lipase (ATGL) manipulations to demonstrate that FA flux through the TAG-rich LDs of glia is beneficial for NB proliferation. In contrast, FA flux through TAG in the NBs themselves is deleterious for proliferation during stress. Together, these findings are consistent with a model whereby oxidative stress triggers neurons to release potentially toxic FAs that are preferentially captured and processed in niche glia in order to safeguard the proliferation of NBs. The work in this thesis reveals metabolic crosstalk between the three main cell types of the developing CNS that may also be relevant in disease contexts known to be associated with ectopic LDs.