Techniques are provided for recovering from compilation errors in environments that use dynamic compilers. Application programs include Java bytecodes, and compilation includes sequential invocation of separate compilation phases on a region of bytecodes. If compilation of a region results in a fatal error, then the compiler identifies the "failed" phase. If the failed phase is a non-essential phase, then the compiler attempts to re-compile the region after skipping the failed phase. However, if the failed phase is essential, then the compiler attempts to replace that failed phase with a simpler version. Nevertheless, if the fatal error cannot be avoided or the compiler is unable to replace the failed phase with a simpler version, then the compiler prevents compilation of the code encompassing the fatal error in future attempts.