Lipid droplets (LDs) are ubiquitous organelles that facilitate neutral lipid storage in cells, including energy-dense triglycerides. They are found in all investigated metazoan embryos where they are thought to provide energy for development. Intriguingly, early embryos of diverse metazoan species asymmetrically allocate LDs amongst cellular lineages, a process which can involve massive intracellular redistribution of LDs. However, the biological reason for asymmetric lineage allocation is unknown. To address this issue, we utilize the Drosophila embryo where the cytoskeletal mechanisms that drive allocation are well characterized. We disrupt allocation by two different means: Loss of the LD protein Jabba results in LDs adhering inappropriately to glycogen granules; loss of Klar alters the activities of the microtubule motors that move LDs. Both mutants cause the same dramatic change in LD tissue inheritance, shifting allocation of the majority of LDs to the yolk cell instead of the incipient epithelium. Embryos with such mislocalized LDs do not fully consume their LDs and are delayed in hatching. Through use of a dPLIN2 mutant, which appropriately localizes a smaller pool of LDs, we find that failed LD transport and a smaller LD pool affect embryogenesis in a similar manner. Embryos of all three mutants display overlapping changes in their transcriptome and proteome, suggesting that lipid deprivation results in a shared embryonic response and a widespread change in metabolism. Excitingly, we find abundant changes related to redox homeostasis, with many proteins related to glutathione metabolism upregulated. LD deprived embryos have an increase in peroxidized lipids and rely on increased utilization of glutathione-related proteins for survival. Thus, embryos are apparently able to mount a beneficial response upon lipid stress, rewiring their metabolism to survive. In summary, we demonstrate that early embryos allocate LDs into specific lineages for subsequent optimal utilization, thus protecting against oxidative stress and ensuring punctual development.