Sleep and metabolism are tightly intertwined physiologically and behaviorally. Previous studies using fruit flies have identified several genes and neuroanatomical loci regulating sleep during starvation. However, the molecular basis for the interaction between the metabolic state of starvation and sleep remains poorly understood. Here, using RNA-seq analysis we show that the transcription of the serine synthesis enzyme astray (aay), which is the fly homolog of the mammalian phosphoserine phosphatase, is significantly induced upon starvation and P-element insertional mutant flies of aay exhibit resistance to starvation- induced sleep suppression. In contrast, mutations in serine/threonine dehydratase (stdh), which degrades serine, exaggerates starvation-induced sleep suppression. Immunohistochemistry localizes aay expression in both glia and neurons, but targeted RNA interference-mediated depletion of aay localizes its sleep regulating function during starvation specifically to neurons. Furthermore, RNAi screening revealed cholinergic neurons to be essential in aay dependent sleep-regulation during starvation, while a nicotinic acetylcholine receptor antagonist rescued the increased starvation-induced sleep suppression in stdh mutants. Taken together, these data demonstrate that a serine metabolic pathway controls arousal during starvation possibly via modulating downstream cholinergic transmission.