Many organisms can enter a dormant state or diapause to survive harsh environmental conditions for extended durations. When Caenorhabditis elegans larvae enter dauer they arrest feeding but remain active and motile, yet become stress-resistant, extremely long-lived and non-ageing. Entry into dauer is associated with a reduction in insulin-like signalling, the accumulation of nutritive resources and a concomitant global change in metabolism, yet the precise molecular and physiological processes that enable long-term survival in the absence of caloric intake remain largely unknown. We show here that C. elegans larvae that lack LKB1/AMPK (AMP-activated protein kinase) signalling enter dauer normally, but then rapidly consume their stored energy and prematurely expire following vital organ failure. We found that this signalling pathway acts in adipose-like tissues to downregulate triglyceride hydrolysis so that these lipid reserves are rationed to last the entire duration of the arrest. Indeed, the downregulation of adipose triglyceride lipase (ATGL-1) activity suppresses both the rapid depletion of stored lipids and reduced life span of AMPK mutant dauers, while AMPK directly phosphorylates ATGL-1. Finally, we show that the slow release of energy during dauer is critical for appropriate long-term osmoregulation, which fails as triglyceride resources become depleted. These mechanisms may be essential for survival through diapause, hibernation, or long-term fasting in diverse organisms and may also underlie AMPK-dependent life span extension.