Proteasome inhibitors sensitize tumor cells to DNA-damaging agents, including ionizing radiation (IR), and DNA cross-linking agents (melphalan and cisplatin) through unknown mechanisms. The Fanconi anemia pathway is a DNA damage–activated signaling pathway, which regulates cellular resistance to DNA cross-linking agents. Monoubiquitination and nuclear foci formation of FANCD2 are critical steps of the Fanconi anemia pathway. Here, we show that proteasome function is required for the activation of the Fanconi anemia pathway and for DNA damage signaling. Proteasome inhibitors (bortezomib and MG132) and depletion of 19S and 20S proteasome subunits (PSMD4, PSMD14, and PSMB3) inhibited monoubiquitination and/or nuclear foci formation of FANCD2, whereas depletion of DSS1/SHFM1, a subunit of the 19S proteasome that also directly binds to BRCA2, did not inhibit FANCD2 monoubiquitination or foci formation. On the other hand, DNA damage–signaling processes, such as IR-induced foci formation of phosphorylated ATM (phospho-ATM), 53BP1, NBS1, BRCA1, FANCD2, and RAD51, were delayed in the presence of proteasome inhibitors, whereas ATM autophosphorylation and nuclear foci formation of γH2AX, MDC1, and RPA were not inhibited. Furthermore, persistence of DNA damage and abrogation of the IR-induced G₁-S checkpoint resulted from proteasome inhibition. In summary, we showed that the proteasome function is required for monoubiquitination of FANCD2, foci formation of 53BP1, phospho-ATM, NBS1, BRCA1, FANCD2, and RAD51. The dependence of specific DNA damage–signaling steps on the proteasome may explain the sensitization of tumor cells to DNA-damaging chemotherapeutic agents by proteasome inhibitors. [Cancer Res 2007;67(15):7395–405]