Telomere loss was produced during development of Drosophila melanogaster by breakage of an induced dicentric chromosome. The most prominent outcome of this event is cell death through Chk2 and Chk1 controlled p53-dependent apoptotic pathways. A third p53-independent apoptotic pathway is additionally utilized when telomere loss is accompanied by the generation of significant aneuploidy. In spite of these three lines of defense against the proliferation of cells with damaged genomes a small fraction of cells that have lost a telomere escape apoptosis and divide repeatedly. Evasion of apoptosis is accompanied by the accumulation of karyotypic abnormalites that often typify cancer cells, including end-to-end chromosome fusions, anaphase bridges, aneuploidy, and polyploidy. There was clear evidence of bridge-breakage-fusion cycles, and surprisingly, chromosome segments without centromeres could persist and accumulate to high-copy number. Cells manifesting these signs of genomic instability were much more frequent when the apoptotic mechanisms were crippled. We conclude that loss of a single telomere is sufficient to generate at least two phenotypes of early cancer cells: genomic instability that involves multiple chromosomes and aneuploidy. This aneuploidy may facilitate the continued escape of such cells from the normal checkpoint mechanisms.