As a barrier epithelium, the intestinal epithelium has to coordinate physiological functions like digestion and nutrient resorption with the control of commensal bacteria and the prevention of pathogenic infections. It can therefore mount powerful innate immune and inflammatory responses, while, at the same time, maintaining tissue homeostasis through regenerative processes. How these different functions are coordinated remains unclear, and further insight is required to understand the age-related loss of homeostasis in this system, as well as the etiology of inflammatory and proliferative diseases of the gut. Recent work in Drosophila melanogaster has provided important new insight into the regulation of regenerative activity, innate immune homeostasis, commensal control, as well as age-related dysfunction in the intestine. Interestingly, many of the identified processes and mechanisms mirror similar homeostatic processes in the vertebrate intestine. This review summarized the current understanding of how innate immune responses, changes in commensal bacteria, and other challenges influence regenerative activity in the aging intestinal epithelium of flies and draws parallels to similar processes in mammals.