SUMOylation is an Ubiquitin-like post-translational modification thought to affect a diverse array of cellular processes, from chromosome segregation to nuclear translocation. The E1 SUMO-activating enzyme is required for the earliest steps of SUMO conjugation, and is composed of heterodimeric Aosl and Uba2 subunits. The genes encoding both of these proteins are essential for viability in yeast, but less is known about their biological role in other organisms. Here we report a transposable element mutation in the aos1 gene of Drosophila that causes complete elimination of imaginal discs (appendage primordia) in homozygous larvae, while the rest of larval tissues appear to be unaffected. We were able to rescue this growth phenotype with a genomic construct containing only the aos1 gene, confirming that the growth defect results solely from loss of aos1. Mosaic analysis reveals that aos1 mutant disc cells die through apoptosis, but when apoptosis is blocked the mutant cells exhibit cell cycle progression defects. Using FACS analysis to measure cell cycle phasing, we found that aos1 mutant cells accumulate in G2/M, indicating a blockage in progression to mitosis. Additionally, uba2 homozygous mutant animals also lack imaginal discs without exhibiting defects in larval tissues, indicating that SUMO E1 enzyme activity is require-red more in some cells than in others. Consistent with this, we show that aos1 and uba2 are primarily required for cell proliferation, since RNAi-mediated aos1 and uba2 knockdown in dividing cells of the eye discs resulted in reduction of eye size, while expression of aos1 or uba2 RNAi in post-mitotic cells of the eye disc had no effect. Together, these results reveal a key role for the E1 SUMO activating enzyme in cell proliferation, but they suggest that SUMO E1 activity is less required for cellular survival, differentiation, or homeostasis of non-dividing cells.