Interstrand cross-links (ICLs) prevent DNA strand separation and, therefore, transcription and replication, making them extremely cytotoxic. The precise mechanism by which ICLs are removed from mammalian genomes largely remains elusive. Genetic evidence implicates ATR, the Fanconi anemia proteins, proteins required for homologous recombination, translesion synthesis, and at least two endonucleases, MUS81-EME1 and XPF-ERCC1. ICLs cause replication-dependent DNA double-strand breaks (DSBs), and MUS81-EME1 facilitates DSB formation. The subsequent repair of these DSBs occurs via homologous recombination after the ICL is unhooked by XPF-ERCC1. Here, we examined the effect of the loss of either nuclease on FANCD2 monoubiquitination to determine if the nucleolytic processing of ICLs is required for the activation of the Fanconi anemia pathway. FANCD2 was monoubiquitinated in Mus81(-/-), Ercc1(-/-), and XPF-deficient human, mouse, and hamster cells exposed to cross-linking agents. However, the monoubiquitinated form of FANCD2 persisted longer in XPF-ERCC1-deficient cells than in wild-type cells. Moreover, the levels of chromatin-bound FANCD2 were dramatically reduced and the number of ICL-induced FANCD2 foci significantly lower in XPF-ERCC1-deficient cells. These data demonstrate that the unhooking of an ICL by XPF-ERCC1 is necessary for the stable localization of FANCD2 to the chromatin and subsequent homologous recombination-mediated DSB repair.