Lipid droplets (LDs) are the major fat storage organelles in eukaryotic cells, but how their size is regulated is unknown. Using genetic screens in C. elegans for LD morphology defects in intestinal cells, we found that mutations in atlastin, a GTPase required for homotypic fusion of endoplasmic reticulum (ER) membranes, cause not only ER morphology defects, but also a reduction in LD size. Similar results were obtained after depletion of atlastin or expression of a dominant-negative mutant, whereas overexpression of atlastin had the opposite effect. Atlastin depletion in Drosophila fat bodies also reduced LD size and decreased triglycerides in whole animals, sensitizing them to starvation. In mammalian cells, co-overexpression of atlastin-1 and REEP1, a paralog of the ER tubule-shaping protein DP1/REEP5, generates large LDs. The effect of atlastin-1 on LD size correlates with its activity to promote membrane fusion in vitro. Our results indicate that atlastin-mediated fusion of ER membranes is important for LD size regulation.