The Mre11 nuclease is involved in early responses to DNA damage, often mediated by its role in DNA end processing. MRE11 mutations and aberrant expression are associated with carcinogenesis and cancer treatment outcomes. While, in recent years, progress has been made in understanding the role of Mre11 nuclease activities in DNA double-strand break repair, their role during replication has remained elusive. The nucleoside analog gemcitabine, widely used in cancer therapy, acts as a replication chain terminator; for a cell to survive treatment, gemcitabine needs to be removed from replicating DNA. Activities responsible for this removal have, so far, not been identified. We show that Mre11 3' to 5' exonuclease activity removes gemcitabine from nascent DNA during replication. This contributes to replication progression and gemcitabine resistance. We thus uncovered a replication-supporting role for Mre11 exonuclease activity, which is distinct from its previously reported detrimental role in uncontrolled resection in recombination-deficient cells.