In multi-cellular organisms, activation of apoptosis can trigger compensatory proliferation in surrounding cells to maintain tissue homeostasis. Genetic studies in Drosophila have indicated that distinct mechanisms of compensatory proliferation are employed in apoptotic tissues of different developmental states. In proliferating eye and wing tissues, the initiator caspase Dronc coordinates cell death and compensatory proliferation through the Jun N-terminal kinase and p53. The mitogens Decapentaplegic and Wingless are induced in this process. By contrast, in differentiating eye tissues, the effector caspases DrICE and Dcp-1 activate the Hedgehog signaling pathway to induce compensatory proliferation. In this review, we summarize these findings and discuss how activation of apoptosis is linked to the process of compensatory proliferation. The developmental and pathological relevance of compensatory proliferation is also discussed.