5-Aza-2'-deoxycytidine (5-azadC) is a DNA methyltransferase (DNMT) inhibitor increasingly used in treatments of hematological diseases and works by being incorporated into DNA and trapping DNMT. It is unclear what DNA lesions are caused by 5-azadC and if such are substrates for DNA repair. Here, we identify that 5-azadC induces DNA damage as measured by γ-H2AX and 53BP1 foci. Furthermore, 5-azadC induces radial chromosomes and chromatid breaks that depend on active replication, which altogether suggest that trapped DNMT collapses oncoming replication forks into double-strand breaks. We demonstrate that RAD51-mediated homologous recombination (HR) is activated to repair 5-azadC collapsed replication forks. Fanconi anemia (FA) is a rare autosomal recessive disorder, and deaths are often associated with leukemia. Here, we show that FANCG-deficient cells fail to trigger HR-mediated repair of 5-azadC-induced lesions, leading to accumulation of chromatid breaks and inter-chromosomal radial fusions as well as hypersensitivity to the cytotoxic effects of 5-azadC. These data demonstrate that the FA pathway is important to protect from 5-azadC-induced toxicity. Altogether, our data demonstrate that cytotoxicity of the epigenetic drug 5-azadC can, at least in part, be explained by collapsed replication forks requiring FA-mediated HR for repair.