Circadian clocks generate daily rhythms in molecular, cellular, and physiological functions providing temporal dimension to organismal homeostasis. Recent evidence suggests two-way relationship between circadian clocks and aging. While disruption of the circadian clock leads to premature aging in animals, there is also age-related dampening of output rhythms such as sleep/wake cycles and hormonal fluctuations. Decay in the oscillations of several clock genes was recently reported in aged fruit flies, but mechanisms underlying these age-related changes are not understood. We report that the circadian light–sensitive protein CRYPTOCHROME (CRY) is significantly reduced at both mRNA and protein levels in heads of old Drosophila melanogaster. Restoration of CRY using the binary GAL4/UAS system in old flies significantly enhanced the mRNA oscillatory amplitude of several genes involved in the clock mechanism. Flies with CRY overexpressed in all clock cells maintained strong rest/activity rhythms in constant darkness late in life when rhythms were disrupted in most control flies. We also observed a remarkable extension of healthspan in flies with elevated CRY. Conversely, CRY-deficient mutants showed accelerated functional decline and accumulated greater oxidative damage. Interestingly, overexpression of CRY in central clock neurons alone was not sufficient to restore rest/activity rhythms or extend healthspan. Together, these data suggest novel anti-aging functions of CRY and indicate that peripheral clocks play an active role in delaying behavioral and physiological aging.