MAPK phosphatases (MKPs) are important negative regulators of MAPKs in vivo, but ascertaining the role of specific MKPs is hindered by functional redundancy in vertebrates. Thus, we characterized MKP function by examining the function of Puckered (Puc), the sole Drosophila Jun N-terminal kinase (JNK)-specific MKP, during embryonic and imaginal disc development. We demonstrate that Puc is a key anti-apoptotic factor that prevents apoptosis in epithelial cells by restraining basal JNK signaling. Furthermore, we demonstrate that JNK signaling plays an important role in gamma-irradiation-induced apoptosis, and examine how JNK signaling fits into the circuitry regulating this process. Radiation upregulates both JNK activity and puc expression in a p53-dependent manner, and apoptosis induced by loss of Puc can be suppressed by p53 inactivation. JNK signaling acts upstream of both Reaper and effector caspases. Finally, we demonstrate that JNK signaling directs normal developmentally regulated apoptotic events. However, if cell death is prevented, JNK activation can trigger tissue overgrowth. Thus, MKPs are key regulators of the delicate balance between proliferation, differentiation and apoptosis during development.