Recent work has identified changes in the metabolism of the aromatic amino acid tyrosine as a risk factor for diabetes and a contributor to the development of liver cancer. While these findings could suggest a role for tyrosine as a direct regulator of the behavior of cells and tissues, evidence for this model is currently lacking. Through the use of RNAi and genetic mutants, we identify tatn-1, which is the worm ortholog of tyrosine aminotransferase and catalyzes the first step of the conserved tyrosine degradation pathway, as a novel regulator of the dauer decision and modulator of the daf-2 insulin/IGF-1-like (IGFR) signaling pathway in Caenorhabditis elegans. Mutations affecting tatn-1 elevate tyrosine levels in the animal, and enhance the effects of mutations in genes that lie within the daf-2/insulin signaling pathway or are otherwise upstream of daf-16/FOXO on both dauer formation and worm longevity. These effects are mediated by elevated tyrosine levels as supplemental dietary tyrosine mimics the phenotypes produced by a tatn-1 mutation, and the effects still occur when the enzymes needed to convert tyrosine into catecholamine neurotransmitters are missing. The effects on dauer formation and lifespan require the aak-2/AMPK gene, and tatn-1 mutations increase phospho-AAK-2 levels. In contrast, the daf-16/FOXO transcription factor is only partially required for the effects on dauer formation and not required for increased longevity. We also find that the controlled metabolism of tyrosine by tatn-1 may function normally in dauer formation because the expression of the TATN-1 protein is regulated both by daf-2/IGFR signaling and also by the same dietary and environmental cues which influence dauer formation. Our findings point to a novel role for tyrosine as a developmental regulator and modulator of longevity, and support a model where elevated tyrosine levels play a causal role in the development of diabetes and cancer in people.