The counterregulatory response to hypoglycemia that restores normal blood glucose levels is an essential physiological function. It is initiated, in large part, by incompletely characterized brain hypoglycemia sensing neurons that trigger the secretion of counterregulatory hormones, in particular glucagon, to stimulate hepatic glucose production. In a genetic screen of recombinant inbred BXD mice we previously identified Agpat5 as a candidate regulator of hypoglycemia-induced glucagon secretion. Here, using genetic mouse models, we demonstrate that Agpat5 expressed in agouti-related peptide neurons is required for their activation by hypoglycemia, for hypoglycemia-induced vagal nerve activity, and glucagon secretion. We find that inactivation of Agpat5 leads to increased fatty acid oxidation and ATP production and that suppressing Cpt1a-dependent fatty acid import into mitochondria restores hypoglycemia sensing. Collectively, our data show that AgRP neurons are involved in the control of glucagon secretion and that Agpat5, by partitioning fatty acyl-CoAs away from mitochondrial fatty acid oxidation and ATP generation, ensures that the fall in intracellular ATP, which triggers neuronal firing, faithfully reflects changes in glycemia.