The PALB2 protein is associated with breast cancer susceptibility and Fanconi anemia. Notably, PALB2 is also required for DNA repair by homologous recombination (HR). However, the mechanisms that regulate PALB2, and the functional significance of its interaction with the BRCA1 breast cancer susceptibility protein, are poorly understood. Here, to better understand these processes, we fused PALB2, or the PALB2(L21P) mutant which cannot bind to BRCA1, with the BRCT repeats that are present in, and which localize, BRCA1. Our results yield important insights into the regulation of PALB2 function. Both fusion proteins can bypass BRCA1 to localize to sites of DNA damage. Further, the localized fusion proteins are functional, as determined by their ability to support the assembly of RAD51 foci, even in the absence of the capacity of PALB2 to bind BRCA1. Strikingly, the localized fusion proteins mediate DNA double-strand break (DSB)-initiated HR and resistance to mitomycin C in PALB2-deficient cells. Additionally, we show that the BRCA1-PALB2 heterodimer, rather than the PALB2-PALB2 homodimer, mediates these responses. Importantly, we offer the first insight into how BRCA1-dependent recruitment of PALB2 is integrated with other DNA damage signaling pathways. We find that PALB2 localization depends on the presence of MDC1, RNF8, RAP80 and Abraxas upstream of BRCA1. Thus, PALB2 may link HR to a key ubiquitin-related signaling pathway that responds to DSBs.