Small RNA pathways are important players in posttranscriptional regulation of gene expression. These pathways play important roles in all aspects of cellular physiology from development to fertility to innate immunity. However, almost nothing is known about the regulation of the central genes in these pathways. The forkhead box O (FOXO) family of transcription factors is a conserved family of DNA-binding proteins that responds to a diverse set of cellular signals. FOXOs are crucial regulators of cellular homeostasis that have a conserved role in modulating organismal aging and fitness. Here, we show that Drosophila FOXO (dFOXO) regulates the expression of core small RNA pathway genes. In addition, we find increased dFOXO activity results in an increase in RNA interference (RNAi) efficacy, establishing a direct link between cellular physiology and RNAi. Consistent with these findings, dFOXO activity is stimulated by viral infection and is required for effective innate immune response to RNA virus infection. Our study reveals an unanticipated connection among dFOXO, stress responses, and the efficacy of small RNA-mediated gene silencing and suggests that organisms can tune their gene silencing in response to environmental and metabolic conditions.