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Deficiency of FANCD2/FANCI-associated nuclease 1 (FAN1) in humans leads to karyomegalic interstitial nephritis (KIN), a rare hereditary kidney disease characterized by chronic renal fibrosis, tubular degeneration, and characteristic polyploid nuclei in multiple tissues. The mechanism of how FAN1 protects cells is largely unknown but is thought to involve FAN1's function in DNA interstrand cross-link (ICL) repair. Here, we describe a Fan1-deficient mouse and show that FAN1 is required for cellular and organismal resistance to ICLs. We show that the ubiquitin-binding zinc finger (UBZ) domain of FAN1, which is needed for interaction with FANCD2, is not required for the initial rapid recruitment of FAN1 to ICLs or for its role in DNA ICL resistance. Epistasis analyses reveal that FAN1 has cross-link repair activities that are independent of the Fanconi anemia proteins and that this activity is redundant with the 5′–3′ exonuclease SNM1A. Karyomegaly becomes prominent in kidneys and livers of Fan1-deficient mice with age, and mice develop liver dysfunction. Treatment of Fan1-deficient mice with ICL-inducing agents results in pronounced thymic and bone marrow hypocellularity and the disappearance of c-kit+ cells. Our results provide insight into the mechanism of FAN1 in ICL repair and demonstrate that the Fan1 mouse model effectively recapitulates the pathological features of human FAN1 deficiency.