Germline mutations in the mismatch repair ( MM R) genes MSH2 , MSH6 , MLH1 and PMS2 are linked to cancer of the colon and other organs, characterised by microsatellite instability and a large increase in mutation frequency. Unexpectedly, mutations in EXO1 , encoding the only exonuclease genetically implicated in MMR, are not linked to familial cancer and cause a substantially weaker mutator phenotype. This difference could be explained if eukaryotic cells possessed additional exonucleases redundant with EXO1. Analysis of the MLH1 interactome identified FANCD2-associated nuclease 1 (FAN1), a novel enzyme with biochemical properties resembling EXO1. We now show that FAN1 efficiently substitutes for EXO1 in MMR assays and that this functional complementation is modulated by its interaction with MLH1. FAN1 also contributes towards MMR in vivo : cells lacking both EXO1 and FAN1 have a MMR defect and display resistance to N -methyl- N -nitrosourea (MNU) and 6-thioguanine (TG). Moreover, FAN1 loss amplifies the mutational profile of EXO1-deficient cells, implying that the two nucleases act redundantly in the same antimutagenic pathway. However, the increased drug resistance and mutator phenotype of FAN1/EXO1-deficient cells are less prominent than those seen in cells lacking MSH6 or MLH1. Eukaryotic cells thus apparently possess additional mechanisms that compensate for the loss of EXO1.