Lipids are either taken up from food sources or produced internally in specialized tissues such as the liver. Among others, both routes of lipid metabolism involve cytochrome P450 monooxygenases (CYPs). We sought to analyze the function of Cyp311a1 that has been shown to be expressed in the midgut of the fruit fly Drosophila melanogaster. Using a GFP-tagged version of CYP311A1that is expressed under the control of its endogenous promoter, we show that Cyp311a1 localizes to the endoplasmic reticulum in epithelial cells of the anterior midgut. In larvae with reduced Cyp311a1 expression in the anterior midgut, compared to control larvae, the apical plasma membrane of the respective epithelial cells contains less and shorter microvilli. In addition, we observed reduction of neutral lipids in the fat body, the insect liver, and decreased phosphatidylethanolamine (PE) and triacylglycerols (TAG) amounts in the whole body of these larvae. Probably as a consequence, they cease to grow and eventually die. The microvillus defects in larvae with reduced Cyp311a1 expression are restored by supplying PE, a major phospholipid of plasma membranes, to the food. Moreover, the growth arrest phenotype of these larvae is partially rescued. Together, these results suggest that the anterior midgut is an import hub in lipid distribution and that the midgut-specific CYP311A1 contributes to this function by participating in shaping microvilli in a PE-dependent manner.