Draper/Ced-1/MEGF-10 is an engulfment receptor that promotes clearance of cellular debris in C. elegans, Drosophila and mammals. Draper signals through an evolutionarily conserved Src family kinase cascade to drive cytoskeletal rearrangements and target engulfment through Rac1. Glia also alter gene expression patterns in response to axonal injury but pathways mediating these responses are poorly defined. We show Draper is cell autonomously required for glial activation of transcriptional reporters after axonal injury. We identify TNF receptor associated factor 4 (TRAF4) as a novel Draper binding partner that is required for reporter activation and phagocytosis of axonal debris. TRAF4 and misshapen (MSN) act downstream of Draper to activate c-Jun N-terminal kinase (JNK) signalling in glia, resulting in changes in transcriptional reporters that are dependent on Drosophila AP-1 (dAP-1) and STAT92E. Our data argue injury signals received by Draper at the membrane are important regulators of downstream transcriptional responses in reactive glia.