Friedreich's ataxia (FRDA) is the most common form of autosomal recessive ataxia caused by a deficit in the mitochondrial protein frataxin. Although demyelination is a common symptom in FRDA patients, no multicellular model has yet been developed to study the involvement of glial cells in FRDA. Using the recently established RNAi lines for targeted suppression of frataxin in Drosophila, we were able to study the effects of general versus glial-specific frataxin downregulation. In particular, we wanted to study the interplay between lowered frataxin content, lipid accumulation and peroxidation and the consequences of these effects on the sensitivity to oxidative stress and fly fitness. Interestingly, ubiquitous frataxin reduction leads to an increase in fatty acids catalyzing an enhancement of lipid peroxidation levels, elevating the intracellular toxic potential. Specific loss of frataxin in glial cells triggers a similar phenotype which can be visualized by accumulating lipid droplets in glial cells. This phenotype is associated with a reduced lifespan, an increased sensitivity to oxidative insult, neurodegenerative effects and a serious impairment of locomotor activity. These symptoms fit very well with our observation of an increase in intracellular toxicity by lipid peroxides. Interestingly, co-expression of a Drosophila apolipoprotein D ortholog (glial lazarillo) has a strong protective effect in our frataxin models, mainly by controlling the level of lipid peroxidation. Our results clearly support a strong involvement of glial cells and lipid peroxidation in the generation of FRDA-like symptoms.