Drosophila tumor suppressor genes have given great insight into the control of tissue size by cell signaling and organization. However, the molecular events required for appropriate organ growth remain poorly understood. Here we report that the Drosophila tumor suppressor tumorous imaginal discs (tid), whose phenotypes were previously attributed to mutations in a DNAJ-like chaperone, are in fact driven by the loss of the N-linked glycosylation pathway component ALG3. tid/alg3 imaginal discs display tissue architecture defects and moderate overgrowth, sharing characteristics of both ‘neoplastic’ and ‘hyperplastic’ mutants. Apicobasal polarity is largely intact, but growth-promoting Hippo signaling is upregulated, and suppressing Yki blocks tumorous overgrowth. Aberrant Yki activity results from excess JNK signaling through the recently described TNF receptor homolog Grindelwald (Grnd), and requires the Eiger/TNF ligand. Interestingly, Grnd contains an N-linked glycosylation site in its ligand binding domain, while loss of N-linked glycosylation alters Egr-Grnd signaling and leads to ectopic Grnd activation in tid/alg3 mutant discs. Our results suggest that TNFR glycosylation modulates JNK signaling through modifying ligand-receptor interactions, opening up a potential model for general TNFR signaling regulation.