Mus81-Eme1 endonuclease has been implicated in the rescue of stalled replication forks and the resolution of meiotic recombination intermediates in yeast. We used gene targeting to study the physiological requirements of Mus81 in mammals. Mus81-/- mice are viable and fertile, which indicates that mammalian Mus81 is not essential for recombination processes associated with meiosis. Mus81-deficient mice and cells were hypersensitive to the DNA cross-linking agent mitomycin C but not to gamma-irradiation. Remarkably, both homozygous Mus81-/- and heterozygous Mus81+/- mice exhibited a similar susceptibility to spontaneous chromosomal damage and a profound and equivalent predisposition to lymphomas and other cancers. These studies demonstrate a critical role for the proper biallelic expression of the mammalian Mus81 in the maintenance of genomic integrity and tumor suppression.