Organisms are structurally robust, as cells accommodate changes preserving structural integrity and function. The molecular mechanisms underlying structural robustness and plasticity are poorly understood, but can be investigated by probing how cells respond to injury. Injury to the CNS induces proliferation of enwrapping glia, leading to axonal re-enwrapment and partial functional recovery. This glial regenerative response is found across species, and may reflect a common underlying genetic mechanism. Here, we show that injury to the Drosophila larval CNS induces glial proliferation, and we uncover a gene network controlling this response. It consists of the mutual maintenance between the cell cycle inhibitor Prospero (Pros) and the cell cycle activators Notch and NFκB. Together they maintain glia in the brink of dividing, they enable glial proliferation following injury, and subsequently they exert negative feedback on cell division restoring cell cycle arrest. Pros also promotes glial differentiation, resolving vacuolization, enabling debris clearance and axonal enwrapment. Disruption of this gene network prevents repair and induces tumourigenesis. Using wound area measurements across genotypes and time-lapse recordings we show that when glial proliferation and glial differentiation are abolished, both the size of the glial wound and neuropile vacuolization increase. When glial proliferation and differentiation are enabled, glial wound size decreases and injury-induced apoptosis and vacuolization are prevented. The uncovered gene network promotes regeneration of the glial lesion and neuropile repair. In the unharmed animal, it is most likely a homeostatic mechanism for structural robustness. This gene network may be of relevance to mammalian glia to promote repair upon CNS injury or disease.