Cytotoxicity of cisplatin and mitomycin C (MMC) is ascribed largely to their ability to generate interstrand crosslinks (ICLs) in DNA, which block the progression of replication forks. The processing of ICLs requires the Fanconi anemia (FA) pathway, excision repair, and translesion DNA synthesis (TLS). It also requires homologous recombination (HR), which repairs double-strand breaks (DSBs) generated by cleavage of the blocked replication forks. Here we describe KIAA1018, an evolutionarily conserved protein that has an N-terminal ubiquitin-binding zinc finger (UBZ) and a C-terminal nuclease domain. KIAA1018 is a 5'-->3' exonuclease and a structure-specific endonuclease that preferentially incises 5' flaps. Like cells from FA patients, human cells depleted of KIAA1018 are sensitized to ICL-inducing agents and display chromosomal instability. The link of KIAA1018 to the FA pathway is further strengthened by its recruitment to DNA damage through interaction of its UBZ domain with monoubiquitylated FANCD2. We therefore propose to name KIAA1018 FANCD2-associated nuclease, FAN1.