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Ewing sarcoma (EwS) is a group of bone and soft tissue cancers in children and young adults. The EWS-FLI1 protein, the oncogenic driver in EwS, is a fusion of the FET protein, EWSR1, at its amino terminus, with the carboxy terminus of the transcription factor, FLI1. Since EwS cells have pronounced sensitivity to radiation and chemotherapy-induced DNA damage, the role of EWS-FLI1 in DNA repair is likely. Here, we demonstrate that EWS-FLI1 causes a defect in microhomology-mediated end-joining (MMEJ) repair. EWSR1 is a splicing factor that promotes the faithful splicing of the pre-mRNA, required for the expression of POLΘ, a critical protein in the MMEJ pathway. Expression of EWS-FLI1, or loss of EWSR1, causes exon 25 skipping of the transcript, decreased POLΘ protein expression, impaired MMEJ, and cellular sensitivity to inhibitors of NHEJ repair and HR repair, through the mechanism of synthetic lethality. Knockdown of EWS-FLI1 expression restores POLΘ mitotic foci and increases MMEJ activity. Based on this mechanism, inhibitors of NHEJ or HR may provide a targeted therapy for patients with Ewing sarcoma.