Although a majority of somatic mutations in cancer are passengers, their mutational signatures provide mechanistic insights into mutagenesis and DNA repair processes. Mutational signature SBS8 is common in most cancers, but its etiology is debated. Incorporating genomic, epigenomic, and cellular process features for multiple cell-types we develop genome-wide composite epigenomic context-maps relevant for mutagenesis and DNA repair. Analyzing somatic mutation data from multiple cancer types in their epigenomic contexts, we show that SBS8 preferentially occurs in gene-poor, lamina-proximal, late replicating heterochromatin domains. While SBS8 is uncommon among mutations in non-malignant tissues, in tumor genomes its proportions increase with replication timing and speed, and checkpoint defects further promote this signature - suggesting that SBS8 probably arises due to uncorrected late replication errors during cancer progression. Our observations offer a potential reconciliation among different perspectives in the debate about the etiology of SBS8 and its relationship with other mutational signatures.