Fanconi anemia (FA) is a genetically heterogeneous disease characterized by developmental defects, progressive bone marrow failure and cancer susceptibility. Cells derived from patients with FA show spontaneous chromosomal aberrations and hypersensitivity to cross-linking agents, indicating a cellular defect in DNA repair. Among the 12 FA genes, only FANCD2, FANCL and FANCM have Drosophila homologs. Given this difference between the human and Drosophila FA pathways, it is unknown whether the fly homologs function in DNA repair. Here, we report that knockdown of Drosophila FANCD2 or FANCL leads to specific hypersensitivity to cross-linking agents. Further analysis revealed that FANCD2 and FANCL function in a linear pathway with FANCL being necessary for the monoubiquitination of FANCD2. FANCD2 mutants also exhibited the same defect in the ionizing radiation-inducible S-phase checkpoint that is seen in mammalian cells deficient for this gene. Finally, in an assay for inactivating mutations, FANCD2 mutants have an elevated mutation rate in response to nitrogen mustard, indicating that these flies are hypermutable. Taken together, these data demonstrate that Drosophila FANCD2 and FANCL play a critical role in DNA repair. Because of the lack of other FA genes, further studies will determine whether the conserved FA genes function as the minimal machinery or whether additional genes are involved in the Drosophila FA pathway.