Sarm1 is an evolutionary conserved innate immune adaptor protein that has emerged as a primary regulator of programmed axonal degeneration over the past decade. In vitro structural insights have revealed that although Sarm1 induces energy depletion by breaking down nicotinamide adenine dinucleotide+ (NAD+), it is also allosterically inhibited by NAD+. However, how NAD+ levels modulate the activation of intracellular Sarm1 has not been elucidated so far. This study focuses on understanding the events leading to Sarm1 activation in both neuronal and non‐neuronal cells using the mitochondrial complex I inhibitor rotenone. Here, we report the regulation of rotenone‐induced cell death by loss of NAD+ that may act as a ‘biological trigger’ of Sarm1 activation. Our study revealed that early loss of endogenous NAD+ levels arising due to PARP1 hyperactivation preceded Sarm1 induction following rotenone treatment. Interestingly, replenishing NAD+ levels by the PARP inhibitor, PJ34 restored mitochondrial complex I activity and also prevented subsequent Sarm1 activation in rotenone‐treated cells. These cellular data were further validated in Drosophila melanogaster where a significant reduction in rotenone‐mediated loss of locomotor abilities, and reduced dSarm expression was observed in the flies following PARP inhibition. Taken together, these observations not only uncover a novel regulation of Sarm1 induction by endogenous NAD+ levels but also point towards an important understanding on how PARP inhibitors could be repurposed in the treatment of mitochondrial complex I deficiency disorders.