Mutations in genes controlling the correct functioning of the replicative, repair and recombination machineries may lead to genomic instability. A high level of spontaneous chromosomal aberrations amplified by treatment with DNA cross-linking agents is the hallmark of Fanconi anemia (FA), an inherited chromosomal instability syndrome associated with cancer proneness. Two of the eight FA genes have been cloned (FAA and FAC), but their function has not yet been defined. The lack of homology with known genes suggests the involvement of FA genes in a novel pathway specific to vertebrates. Using a DNA end-joining assay in cultured cells, we studied the processing of both blunt and cohesive-ended double strand breaks (DSB) in normal and FA cells. The results show that: (i) the overall ligation efficiency is normal in FA lymphoblasts; (ii) in FA-C, error-free processing of blunt-ended DSB is markedly decreased, resulting in a higher deletion frequency and larger deletion size; (iii) the fidelity of processing of blunt-DSB is completely restored in FACC cells (complemented with wild-type FAC gene) and the deletion size shifted to values similar to that observed in normal cells; (iv) the fidelity of cohesive end-joining is not affected in FA cells; (v) activities and/or expression of known factors involved in DSB processing, such as the components of the DNA-PK complex and XRCC4, are normal in FA cells. Our results provide strong evidence that the lack of a functional FAC gene results in loss of fidelity of end-joining, which likely accounts for the FA-C phenotype of chromosome instability. We conclude that FAC, and perhaps all FA gene products, are likely to play a role in the fidelity of end-joining of specific DSB.