Presenilins were identified as causative factors in familial Alzheimer's disease and also play an essential role in Notch signaling during development. We previously identified FKBP14, a member of the family of FK506-binding proteins (FKBPs), as a modifier of Presenilin in Drosophila. FKBPs are highly conserved peptidyl-prolyl cis-trans isomerases that play integral roles in protein folding, assembly and trafficking. Although FKBPs have been implicated in a broad range of biological processes, they are non-essential in yeast and their role in the development of multicellular organisms remains unclear. We show that FKBP14 is an essential gene in Drosophila and that loss of FKBP14 gives rise to specific defects in eye, bristle and wing development. FKBP14 mutants genetically interact with components of the Notch pathway, indicating that these phenotypes are associated, at least in part, with dysregulation of Notch signaling. We show that whereas Notch trafficking to the membrane is unaffected in FKBP14 mutants, levels of Notch target genes are reduced, suggesting that FKBP14 acts downstream of Notch activation at the membrane. Consistent with this model, we find that Presenilin protein levels and γ-secretase activity are reduced in FKBP14 null mutants. Altogether, our data demonstrate that FKBP14 plays an essential role in development, one aspect of which includes regulating members of the Notch signaling pathway.