DNA mismatch repair (MMR) is a multifunctional process that promotes genetic stability and suppresses carcinogenesis. Correction of DNA replication errors is its major function. Despite the importance of MMR, its functioning in eukaryotes is not well understood. Here we report that human mismatch correction reactions in cell-free extracts occur during concomitant nick-dependent nucleosome assembly shaped by the replication histone chaperone CAF-I. Concomitant nucleosome assembly protects the discontinuous mismatch-containing strands from excessive degradation by MMR machinery. Such protection is also demonstrated in a defined purified system that supports both mismatch correction and CAF-I-dependent histone H3-H4 deposition reactions. In addition, we find that the mismatch recognition factor MutSα suppresses CAF-I-dependent histone H3-H4 deposition in a mismatch-dependent manner. We suggest that there is active crosstalk between MMR and replication-dependent nucleosome assembly during the correction of DNA replication errors and, as a result, the nascent mismatch-containing strands are degraded in a controlled manner.