Chromosomal instability (CIN) is thought to be a source of mutability in cancer. However, CIN often results in aneuploidy, which compromises cell fitness. Here, we used the dosage compensation mechanism (DCM) of Drosophila to demonstrate that chromosome-wide gene dosage imbalance contributes to the deleterious effects of CIN-induced aneuploidy and its pro-tumorigenic action. We present evidence that resetting of the DCM counterbalances the damaging effects caused by CIN-induced changes in X chromosome number. Importantly, interfering with the DCM suffices to mimic the cellular effects of aneuploidy in terms of reactive oxygen species (ROS) production, JNK-dependent cell death, and tumorigenesis upon apoptosis inhibition. We unveil a role of ROS in JNK activation and a variety of cellular and tissue-wide mechanisms that buffer the deleterious effects of CIN, including DNA-damage repair, activation of the p38 pathway, and cytokine induction to promote compensatory proliferation. Our data reveal the existence of robust compensatory mechanisms that counteract CIN-induced cell death and tumorigenesis.