The Fanconi Anemia (FA) repair pathway governs the repair of highly genotoxic DNA interstrand crosslinks (ICLs) with the assistance of translesion synthesis (TLS), that is facilitated by site-specific monoubiquitination of PCNA (PCNA-Ub) at lysine 164 (K164). Mutation at this residue (K164R) renders mammals hypersensitive to ICLs. Besides the FA pathway, alternative pathways have been associated with ICL repair However, the decision-making between the different pathways remains elusive. To study the dependence and relevance of PCNA-Ub in FA repair and pathway preference, we generated a germline Fancg-/- mouse and intercrossed PcnaK164R/+;Fancg-/+ mice. A compound mutation (KR;FGko) was embryonic lethal with the noted exception of very infrequent escapers. RNAseq of primary double mutant mouse embryonic fibroblasts (MEFs) revealed elevated levels of replication stress-induced checkpoints, which were rescued by Trp53 knockdown. Upon crosslink induction, KR and FGko MEFs displayed a similar phenotype regarding sensitivity, cell cycle arrest, fork progression and accumulation of single stranded DNA.Remarkably, PCNA-Ub excludes the mismatch recognition complex MSH2/MSH6 from being recruited. Our results implicate a dual function of PCNA-Ub in ICL repair: 1. Facilitate TLS opposite the unhooked ICL and 2. simultaneously exclude MSH2/MSH6 recruitment to channel the ICL towards canonical FA repair.