During leaf development, a decrease in cell number often triggers an increase in cell size. This phenomenon, called compensation, suggests that some system coordinates cell proliferation and cell expansion, but how this is mediated at the molecular level is still unclear. The fugu2 mutants in Arabidopsis (Arabidopsis thaliana) exhibit typical compensation phenotypes. Here, we report that the FUGU2 gene encodes FASCIATA1 (FAS1), the p150 subunit of Chromatin Assembly Factor1. To uncover how the fas1 mutation induces compensation, we performed microarray analyses and found that many genes involved in the DNA damage response are up-regulated in fas1. Our genetic analysis further showed that activation of the DNA damage response and the accompanying decrease of cell number in fas1 depend on ATAXIA TELANGIECTASIA MUTATED (ATM) but not on ATM AND RAD3 RELATED. Kinematic analysis suggested that the delay in the cell cycle leads to a decrease in cell number in fas1 and that loss of ATM partially restores this phenotype. Consistently, both cell size phenotypes and high ploidy phenotypes of fas1 are also suppressed by atm, supporting that the ATM-dependent DNA damage response leads to these phenotypes. Altogether, these data suggest that the ATM-dependent DNA damage response acts as an upstream trigger in fas1 to delay the cell cycle and promote entry into the endocycle, resulting in compensated cell expansion.