Topoisomerase inhibitors such as camptothecin and etoposide are used as anti-cancer drugs and induce double-strand breaks (DSBs) in genomic DNA in cycling cells. These DSBs are often covalently bound with polypeptides at the 3′ and 5′ ends. Such modifications must be eliminated before DSB repair can take place, but it remains elusive which nucleases are involved in this process. Previous studies show that CtIP plays a critical role in the generation of 3′ single-strand overhang at “clean” DSBs, thus initiating homologous recombination (HR)–dependent DSB repair. To analyze the function of CtIP in detail, we conditionally disrupted the CtIP gene in the chicken DT40 cell line. We found that CtIP is essential for cellular proliferation as well as for the formation of 3′ single-strand overhang, similar to what is observed in DT40 cells deficient in the Mre11/Rad50/Nbs1 complex. We also generated DT40 cell line harboring CtIP with an alanine substitution at residue Ser332, which is required for interaction with BRCA1. Although the resulting CtIPS332A/−/− cells exhibited accumulation of RPA and Rad51 upon DNA damage, and were proficient in HR, they showed a marked hypersensitivity to camptothecin and etoposide in comparison with CtIP+/−/− cells. Finally, CtIPS332A/−/−BRCA1−/− and CtIP+/−/−BRCA1−/− showed similar sensitivities to these reagents. Taken together, our data indicate that, in addition to its function in HR, CtIP plays a role in cellular tolerance to topoisomerase inhibitors. We propose that the BRCA1-CtIP complex plays a role in the nuclease-mediated elimination of oligonucleotides covalently bound to polypeptides from DSBs, thereby facilitating subsequent DSB repair.