5-Fluorouracil (FU) has been widely used for more than four decades in the treatment of a range of common cancers. The fluorine-substituted uracil analogue is converted to several active metabolites but the mechanism of cytotoxicity has remained unclear. In a widely cited but unsubstantiated model, FU is thought to kill cells via the inhibition of thymidylate synthase and increased use of dUTP in place of TTP during DNA replication, with subsequent excision of high levels of uracil causing the fragmentation of newly synthesized DNA. Using gene-targeted cell lines defective in one or both of the two mammalian uracil-DNA glycosylase repair enzymes, we were able to test this model of FU cytotoxicity. Here, we show that incorporation of FU itself into DNA has been previously underestimated and is a predominant cause of cytotoxicity. FU readily becomes incorporated into the DNA of drug-treated cells, and accumulation of FU in the genome, rather than uracil excision, is correlated with FU cytotoxicity in mammalian cells. Furthermore, the Smug1, but not the Ung, uracil-DNA glycosylase excises FU from DNA and protects against cell killing. The data provides a clearer understanding of the action of FU, suggesting predictive biomarkers of drug response and a mechanism for acquired resistance in tumors.