Fanconi anemia is an autosomal recessive syndrome characterized by diverse clinical symptoms, hypersensitivity to DNA crosslinking agents, chromosomal instability and susceptibility to cancer. Fanconi anemia has at least 11 complementation groups (A, B, C, D1, D2, E, F, G, I, J, L); the genes mutated in 8 of these have been identified. The gene BRCA2 was suggested to underlie complementation group B, but the evidence is inconclusive. Here we show that the protein defective in individuals with Fanconi anemia belonging to complementation group B is an essential component of the nuclear protein 'core complex' responsible for monoubiquitination of FANCD2, a key event in the DNA-damage response pathway associated with Fanconi anemia and BRCA. Unexpectedly, the gene encoding this protein, FANCB, is localized at Xp22.31 and subject to X-chromosome inactivation. X-linked inheritance has important consequences for genetic counseling of families with Fanconi anemia belonging to complementation group B. Its presence as a single active copy and essentiality for a functional Fanconi anemia-BRCA pathway make FANCB a potentially vulnerable component of the cellular machinery that maintains genomic integrity.