Anemia of inflammation (AI) is a common comorbidity associated with obesity, diabetes, cardiac disease, aging, and during anti-cancer therapies. Mounting evidence illustrates that males are disproportionally affected by AI, but not why. Here we demonstrate a molecular cause for a sex-bias in inflammation. The data shows that mitochondrial DNA (mtDNA) instability induced by dietary stress causes anemia associated with inflamed macrophages and improper iron recycling in mice. These phenotypes are enhanced in mice with mutations in Fanco/Rad51c , which predisposes to the progeroid disease Fanconi Anemia. The data reveals a striking sex-bias whereby females are protected. We find that estrogen acts as a mitochondrial antioxidant that reduces diet-induced oxidative stress, mtDNA replication instability and the distinctively mtDNA-dependent unphosphorylated STAT1 response. Consequently, treatment of male Rad51c mutant mice with estrogen or mitochondrial antioxidants suppresses the inflammation-induced anemia. Collectively, this study uncovers estrogen-responsive mtDNA replication instability as a cause for sex-specific inflammatory responses and molecular driver for AI.