Neutrophils are critical and short-lived mediators of innate immunity that require constant replenishment. Their differentiation in the bone marrow requires extensive cytoplasmic and nuclear remodeling, but the processes governing these energy-consuming changes are unknown. While previous studies show that autophagy is required for differentiation of other blood cell lineages, its function during granulopoiesis has remained elusive. Here, we have shown that metabolism and autophagy are developmentally programmed and essential for neutrophil differentiation in vivo. Atg7-deficient neutrophil precursors had increased glycolytic activity but impaired mitochondrial respiration, decreased ATP production, and accumulated lipid droplets. Inhibiting autophagy-mediated lipid degradation or fatty acid oxidation alone was sufficient to cause defective differentiation, while administration of fatty acids or pyruvate for mitochondrial respiration rescued differentiation in autophagy-deficient neutrophil precursors. Together, we show that autophagy-mediated lipolysis provides free fatty acids to support a mitochondrial respiration pathway essential to neutrophil differentiation.