Atg6 (beclin 1 in mammals) is a core component of the Vps34 complex that is required for autophagy. Beclin 1 (Becn1) functions as a tumor suppressor, and Becn1(+/-) tumors in mice possess elevated cell stress and p62 levels, altered NF-κB signaling and genome instability. The tumor suppressor function of Becn1 has been attributed to its role in autophagy, and the potential functions of Atg6/Becn1 in other vesicle trafficking pathways for tumor development have not been considered. Here, we generate Atg6 mutant Drosophila and demonstrate that Atg6 is essential for autophagy, endocytosis and protein secretion. By contrast, the core autophagy gene Atg1 is required for autophagy and protein secretion, but it is not required for endocytosis. Unlike null mutants of other core autophagy genes, all Atg6 mutant animals possess blood cell masses. Atg6 mutants have enlarged lymph glands (the hematopoietic organ in Drosophila), possess elevated blood cell numbers, and the formation of melanotic blood cell masses in these mutants is not suppressed by mutations in either p62 or NFκB genes. Thus, like mammals, altered Atg6 function in flies causes hematopoietic abnormalities and lethality, and our data indicate that this is due to defects in multiple membrane trafficking processes.