Human Wolf-Hirschhorn syndrome (WHS) is a multigenic disorder resulting from a hemizygous deletion on chromosome 4. LETM1 is the best candidate gene for seizures, the strongest haploinsufficiency phenotype of WHS patients. Here, we identify the Drosophila gene CG4589 as the ortholog of LETM1 and name the gene DmLETM1. Using RNA interference approaches in both Drosophila melanogaster cultured cells and the adult fly, we have assayed the effects of down-regulating the LETM1 gene on mitochondrial function. We also show that DmLETM1 complements growth and mitochondrial K1/H1 exchange (KHE) activity in yeast deficient for LETM1. Genetic studies allowing the conditional inactivation of LETM1 function in specific tissues demonstrate that the depletion of DmLETM1 results in roughening of the adult eye, mitochondrial swelling and developmental lethality in third-instar larvae, possibly the result of deregulated mitophagy. Neuronal specific down-regulation of DmLETM1 results in impairment of locomotor behavior in the fly and reduced synaptic neurotransmitter release. Taken together our results demonstrate the function of DmLETM1 as a mitochondrial osmoregulator through its KHE activity and uncover a pathophysiological WHS phenotype in the model organism D. melanogaster.