Fanconi anemia (FA) cells exhibit hypersensitivity to DNA interstrand cross-links (ICLs) and high levels of chromosome instability. FA gene products have been shown to functionally or physically interact with BRCA1, RAD51 and the MRE11/RAD50/NBS1 complex, suggesting that the FA complex may be involved in the repair of DNA double-strand breaks (DSBs). Here, we have investigated specifically the function of the FA group A protein (FANCA) in the repair of DSBs in mammalian cells. We show that the targeted deletion of Fanca exons 37-39 generates a null for Fanca in mice and abolishes ubiquitination of Fancd2, the downstream effector of the FA complex. Cells lacking Fanca exhibit increased chromosomal aberrations and attenuated accumulation of Brca1 and Rad51 foci in response to DNA damage. The absence of Fanca greatly reduces gene-targeting efficiency in mouse embryonic stem (ES) cells and compromises the survival of fibroblast cells in response to ICL agent treatment. Fanca-null cells exhibit compromised homology-directed repair (HDR) of DSBs, particularly affecting the single-strand annealing pathway. These data identify the Fanca protein as an integral component in the early step of HDR of DSBs and thereby minimizing the genomic instability.