Fanconi anemia (FA) is an inherited disease characterized by bone marrow failure and increased cancer risk. FA is caused by mutation of any 1 of 22 genes, and the FA proteins function cooperatively to repair DNA interstrand cross-links (ICLs). A central step in the activation of the FA pathway is the monoubiquitination of the FANCD2 and FANCI proteins, which occurs within chromatin. How FANCD2 and FANCI are anchored to chromatin remains unknown. In this study, we identify and characterize a FANCD2 histone-binding domain (HBD) and embedded methyl-lysine-binding domain (MBD) and demonstrate binding specificity for H4K20me2. Disruption of the HBD/MBD compromises FANCD2 chromatin binding and nuclear focus formation and its ability to promote error-free DNA interstrand cross-link repair, leading to increased error-prone repair and genome instability. Our study functionally describes the first FA protein chromatin reader domain and establishes an important link between this human genetic disease and chromatin plasticity.