XRCC4-like factor (XLF) is a non-homologous end joining (NHEJ) DNA double strand break repair protein. However, XLF deficiency leads to phenotypes in mice and humans that are not necessarily consistent with an isolated defect in NHEJ. Here we show that XLF functions during DNA replication. XLF undergoes cell division cycle 7-dependent phosphorylation; associates with the replication factor C complex, a critical component of the replisome; and is found at replication forks. XLF deficiency leads to defects in replication fork progression and an increase in fork reversal. The additional loss of H2AX, which protects DNA ends from resection, leads to a requirement for ATR to prevent an MRE11-dependent loss of newly synthesized DNA and activation of DNA damage response. Moreover, H2ax−/−:Xlf−/− cells exhibit a marked dependence on the ATR kinase for survival. We propose that XLF and H2AX function in series to prevent replication stress induced by the MRE11-dependent resection of regressed arms at reversed replication forks.