Notch signalling activity regulates hematopoiesis in Drosophila and vertebrates alike. Parasitoid wasp infestation of Drosophila larvae, however, requires a timely downregulation of Notch activity to allow the formation of encapsulation-active blood cells. Here, we show that the Drosophila CSL transcription factor Suppressor of Hairless [Su(H)] is phosphorylated at Serine 269 in response to parasitoid wasp infestation. As this phosphorylation interferes with the DNA binding of Su(H), it reversibly precludes its activity. Accordingly, phospho-deficient Su(H)S269A mutants are immune-compromised. A screen for kinases involved in Su(H) phosphorylation identified Pkc53E, required for normal hematopoiesis as well as for parasitoid immune response. Genetic and molecular interactions support the specificity of the Su(H)-Pkc53E relationship. Moreover, phorbol ester treatment inhibits Su(H) activity in vivo and in human cell culture. We conclude that Pkc53E targets Su(H) during parasitic wasp infestation, thereby remodelling the blood cell population required for wasp egg encapsulation.