Inflammatory response in Drosophila to sterile (axenic) injury in embryos and adults has received some attention in recent years, and most concentrate on the events at the injury site. Here we focus on the effect sterile injury has on the hematopoietic organ, the lymph gland, and the circulating blood cells in the larva, the developmental stage at which major events of hematopoiesis are evident. In mammals, injury activates Toll-like receptor/NF-κB signaling in macrophages, which then express and secrete secondary, proinflammatory cytokines. In Drosophila larvae, distal puncture injury of the body wall epidermis causes a rapid activation of Toll and Jun kinase (JNK) signaling throughout the hematopoietic system and the differentiation of a unique blood cell type, the lamellocyte. Furthermore, we find that Toll and JNK signaling are coupled in their activation. Secondary to this Toll/JNK response, a cytokine, Upd3, is induced as a Toll pathway transcriptional target, which then promotes JAK/STAT signaling within the blood cells. Toll and JAK/STAT signaling are required for the emergence of the injury-induced lamellocytes. This is akin to the derivation of specialized macrophages in mammalian systems. Upstream, at the injury site, a Duox- and peroxide-dependent signal causes the activation of the proteases Grass and SPE, needed for the activation of the Toll-ligand Spz, but microbial sensors or the proteases most closely associated with them during septic injury are not involved in the axenic inflammatory response.