DJ-1 (or PARK-7) is a multifunctional protein implicated in numerous pathologies including cancer, sterility and Parkinson disease (PD). The popular genetic model Drosophila melanogaster has two orthologs, dj-1: α and β. Dysfunction of dj-1β strongly impairs fly mobility in an age-dependent manner. In this study, we analyze in detail the molecular mechanism underlying the dj-1β mutant phenotype. Mitochondrial hydrogen peroxide production, but not superoxide production, was increased in mutant flies. An increase in peroxide leak from mitochondria causes oxidative damage elsewhere and explains the strong reduction in mobility caused by dj-1β mutation. However, at the same time, increased levels of hydrogen peroxide activated a pro-survival program characterized by (1) an alteration in insulin-like signaling, (2) an increase in mitochondrial biogenesis and (3) an increase in the de-acetylase activity of sirtuins. The activation of this pro-survival program was associated with increased longevity under conditions of moderate oxidative stress. Additionally, the dj-1β mutation unexpectedly accelerated development, a phenotype not previously associated with this mutation. Our results reveal an important role of dj-1β in oxidative stress handling, insulin-like signaling and development in Drosophila melanogaster.