XRN2 is a 5'-3' exoribonuclease implicated in transcription termination. Here we demonstrate an unexpected role for XRN2 in the DNA damage response involving resolution of R-loop structures and prevention of DNA double-strand breaks (DSBs). We show that XRN2 undergoes DNA damage-inducible nuclear re-localization, co-localizing with 53BP1 and R loops, in a transcription and R-loop-dependent process. XRN2 loss leads to increased R loops, genomic instability, replication stress, DSBs and hypersensitivity of cells to various DNA damaging agents. We demonstrate that the DSBs that arise with XRN2 loss occur at transcriptional pause sites. XRN2-deficient cells also exhibited an R-loop- and transcription-dependent delay in DSB repair after ionizing radiation, suggesting a novel role for XRN2 in R-loop resolution, suppression of replication stress, and maintenance of genomic stability. Our study highlights the importance of regulating transcription-related activities as a critical component in maintaining genetic stability.