The relationship between population size, inbreeding, loss of genetic variation and evolutionary potential of fitness traits is still unresolved, and large-scale empirical studies testing theoretical expectations are surprisingly scarce. Here we present a highly replicated experimental evolution setup with 120 lines of Drosophila melanogaster having experienced inbreeding caused by low population size for a variable number of generations. Genetic variation in inbred lines and in outbred control lines was assessed by genotyping-by-sequencing (GBS) of pooled samples consisting of 15 males per line. All lines were reared on a novel stressful medium for 10 generations during which body mass, productivity, and extinctions were scored in each generation. In addition, we investigated egg-to-adult viability in the benign and the stressful environments before and after rearing at the stressful conditions for 10 generations. We found strong positive correlations between levels of genetic variation and evolutionary response in all investigated traits, and showed that genomic variation was more informative in predicting evolutionary responses than population history reflected by expected inbreeding levels. We also found that lines with lower genetic diversity were at greater risk of extinction. For viability, the results suggested a trade-off in the costs of adapting to the stressful environments when tested in a benign environment. This work presents convincing support for long-standing evolutionary theory, and it provides novel insights into the association between genetic variation and evolutionary capacity in a gradient of diversity rather than dichotomous inbred/outbred groups.