Translationally controlled tumour protein (TCTP) is implicated in growth regulation and cancer. Recently, human TCTP has been suggested to play a role in the DNA damage response by forming a complex with ataxia telangiectasia-mutated (ATM) kinase . However, the exact nature of this interaction and its roles in vivo remained unclear. Here, we utilize Drosophila as an animal model to study the nuclear function of Drosophila TCTP (dTCTP). dTCTP mutants show increased radiation sensitivity during development as well as strong genetic interaction with dATM mutations, resulting in severe defects in developmental timing, organ size and chromosome stability. We identify Drosophila ATM (dATM) as a direct binding partner of dTCTP and describe a mechanistic basis for dATM activation by dTCTP. Altogether, this study provides the first in vivo evidence for direct modulation of dATM activity by dTCTP in the control of genome stability and organ development.