Mutations or dysregulated expression of NF-kappaB-activating protein (NKAP) family genes have been found in human cancers. How NKAP family gene mutations promote tumor initiation and progression remains to be determined. Here, we characterized dNKAP, the Drosophila homolog of NKAP, and showed that impaired dNKAP function causes genome instability and tumorigenic growth in a Drosophila epithelial tumor model. dNKAP-knockdown wing imaginal discs exhibit tumorigenic characteristics, including tissue overgrowth, cell-invasive behavior, abnormal cell polarity, and cell adhesion defects. dNKAP knockdown causes both R-loop accumulation and DNA damage, indicating the disruption of genome integrity. Further analysis showed that dNKAP knockdown induces c-Jun N-terminal kinase (JNK)-dependent apoptosis and causes aberrant cell proliferation in distinct cell populations. Activation of the Notch and JAK/STAT signaling pathways contributes to the tumorigenic growth of dNKAP-knockdown tissues. Furthermore, JNK signaling is essential for dNKAP depletion-mediated cell invasion. Transcriptome analysis of dNKAP-knockdown tissues confirmed the misregulation of signaling pathways involved in promoting tumorigenesis and revealed abnormal regulation of metabolic pathways. dNKAP knockdown and oncogenic Ras, Notch, or Yki mutations show synergies in driving tumorigenesis, further supporting the tumor-suppressive role of dNKAP. In summary, this study demonstrates that dNKAP plays a tumor-suppressive role by preventing genome instability in Drosophila epithelia and thus provides novel insights into the roles of human NKAP family genes in tumor initiation and progression.