Alternative DNA structure-forming sequences can stimulate mutagenesis and are enriched at mutation hotspots in human cancer genomes, implicating them in disease etiology. However, the mechanisms involved are not well characterized. Here, we discover that Z-DNA is mutagenic in yeast as well as human cells, and that the nucleotide excision repair complex, Rad10-Rad1(ERCC1-XPF), and the mismatch repair complex, Msh2-Msh3, are required for Z-DNA-induced genetic instability in yeast and human cells. Both ERCC1-XPF and MSH2-MSH3 bind to Z-DNA-forming sequences, though ERCC1-XPF recruitment to Z-DNA is dependent on MSH2-MSH3. Moreover, ERCC1-XPF-dependent DNA strand-breaks occur near the Z-DNA-forming region in human cell extracts, and we model these interactions at the sub-molecular level. We propose a relationship in which these complexes recognize and process Z-DNA in eukaryotes, representing a mechanism of Z-DNA-induced genomic instability.