Developing organisms have evolved a wide range of mechanisms for coping with recurrent environmental challenges. How they cope with rare or unforeseen challenges is, however, unclear as are the implications to their unchallenged offspring. Here, we investigate these questions by confronting the development of the fly, D. melanogaster, with artificial tissue distributions of toxic stress that are not expected to occur during fly development. We show that under a wide range of toxic scenarios, this challenge can lead to modified development that may coincide with increased tolerance to an otherwise lethal condition. Part of this response was mediated by suppression of Polycomb group genes, which in turn leads to derepression of developmental regulators and their expression in new domains. Importantly, some of the developmental alterations were epigenetically inherited by subsequent generations of unchallenged offspring. These results show that the environment can induce alternative patterns of development that are stable across multiple generations.