Drinking water arsenic exposure has been associated with increased bladder cancer susceptibility. Epidemiologic and experimental data suggest a co-carcinogenic effect of arsenic with exposure to DNA damaging agents, such as cigarette smoke. Recent evidence further supports the hypothesis that genetic variation in DNA repair genes can modify the arsenic-cancer relationship, possibly because arsenic impairs DNA repair capacity. We tested this hypothesis in a population-based study of bladder cancer with XRCC3, ERCC2 genotype/haplotype and arsenic exposure data on 549 controls and 342 cases. Individual exposure to arsenic was determined in toenail samples by neutron activation. Gene-environment interaction with arsenic exposure was observed in relation to bladder cancer risk for a variant allele of the double-strand break repair gene XRCC3 T241M (adjusted OR 2.8 (1.1-7.3)) comparing to homozygous wild type among those in the top arsenic exposure decile (interaction p-value 0.01). Haplotype analysis confirmed the association of the XRCC3 241. Thus, double-strand break repair genotype may enhance arsenic associated bladder cancer susceptibility in the U.S. population.