Sister chromatid exchanges (SCEs) are products of joint DNA molecule resolution, and are considered to form through homologous recombination (HR). Indeed, upon generation of irradiation-induced DNA breaks, SCE induction was compromised in cells deficient for canonical HR factors BRCA1, BRCA2 and RAD51. Contrarily, replication-blocking agents, including PARP inhibitors, induced SCEs independently of BRCA1, BRCA2 and RAD51. PARP inhibitor-induced SCEs were enriched at common fragile sites (CFSs), and were accompanied by post-replicative single-stranded DNA (ssDNA) gaps. Moreover, PARP inhibitor-induced replication lesions were transmitted into mitosis, suggesting that SCEs originate from mitotic processing of under-replicated DNA. We found that DNA polymerase theta (POLQ) was recruited to mitotic DNA lesions, and loss of POLQ resulted in reduced SCE numbers and severe chromosome fragmentation upon PARP inhibition in HR-deficient cells. Combined, our data show that PARP inhibition generates under-replicated DNA, which is transferred into mitosis and processed into SCEs, independently of canonical HR factors.