Recent studies show overlap between Fanconi anemia (FA) proteins and those involved in DNA repair mediated by homologous recombination (HR). However, the mechanism by which FA proteins affect HR is unclear. FA proteins (FancA/C/E/F/G/L) form a multiprotein complex, which is responsible for DNA damage-induced FancD2 monoubiquitination, a key event for cellular resistance to DNA damage. Here, we show that FANCD2-disrupted DT40 chicken B-cell line is defective in HR-mediated DNA double-strand break (DSB) repair, as well as gene conversion at the immunoglobulin light-chain locus, an event also mediated by HR. Gene conversions occurring in mutant cells were associated with decreased nontemplated mutations. In contrast to these defects, we also found increased spontaneous sister chromatid exchange (SCE) and intact Rad51 foci formation after DNA damage. Thus, we propose that FancD2 promotes a subpathway of HR that normally mediates gene conversion by a mechanism that avoids crossing over and hence SCEs.