Vertebrate glucocorticoid receptor (GR) is an evolutionary-conserved cortisol-regulated nuclear receptor that controls key metabolic and developmental pathways. Upon binding to cortisol, GR acts as an immunosuppressive transcription factor. Drosophila melanogaster, a model organism to study innate immunity, can also be immunosuppressed by glucocorticoids. However, while the genome of fruit fly harbors 18 nuclear receptor genes, the functional homolog of vertebrate GR has not been identified. In this study, we demonstrated that while D. melanogaster is susceptible to Saccharomyces cerevisiae oral infection, the oral exposure to cortisol analogs, cortisone acetate or estrogen, increases fly sensitivity to yeast challenge. To understand the mechanism of this steroid-induced immunosuppression, we identified the closest genetic GR homolog as D. melanogaster Estrogen Related Receptor (ERR) gene. We discovered that Drosophila ERR is necessary for cortisone acetate- and estrogen-mediated increase in sensitivity to fungal infection: while ERR mutant flies are as sensitive to the fungal challenge as the wildtype flies, the yeast-sensitivity of ERR mutants is not increased by these steroids. Interestingly, the fungal cortisone analog, ergosterol, did not increase the susceptibility of Drosophila to yeast infection. The immunosuppressive effect of steroids on the sensitivity of flies to fungi is evolutionary conserved in insects, as we show that estrogen significantly increases the yeast-sensitivity of Culex quinquefasciatus mosquitoes, whose genome contains a close ortholog of the fly ERR gene. This study identifies a D. melanogaster gene that structurally resembles vertebrate GR and is functionally necessary for the steroid-mediated immunosuppression to fungal infections.