Abstract Germline integrity is critical for progeny fitness. Organisms deploy the DNA damage response (DDR) signalling to protect germline from genotoxic stress, facilitating cell-cycle arrest of germ cells and DNA repair or their apoptosis. Cell-autonomous regulation of germline quality is well-studied; however, how quality is enforced cell non-autonomously on sensing somatic DNA damage is less known. Using Caenorhabditis elegans, we show that DDR disruption, only in the uterus, when insulin-IGF-1 signalling (IIS) is low, arrests germline development and induces sterility in a FOXO/DAF-16 transcription factor (TF)-dependent manner. Without FOXO/DAF-16, germ cells of the IIS mutant escape arrest to produce poor quality oocytes, showing that the TF imposes strict quality control during low IIS. In response to low IIS in neurons, FOXO/DAF-16 works cell autonomously as well as non-autonomously to facilitate the arrest. Activated FOXO/DAF-16 promotes transcription of checkpoint and DDR genes, protecting germline integrity. However, on reducing DDR during low IIS, the TF decreases ERK/MPK-1 signaling below a threshold, and transcriptionally downregulates genes involved in spermatogenesis-to-oogenesis switch as well as cdk-1/Cyclin B to promote germline arrest. Altogether, our study reveals how cell non-autonomous function of FOXO/DAF-16 promotes germline quality and progeny fitness in response to somatic DNA damage.