The histone H2A variant H2AX is rapidly phosphorylated in response to DNA double-stranded breaks to produce gamma-H2AX. gamma-H2AX stabilizes cell-cycle checkpoint proteins and DNA repair factors at the break site. We previously found that the protein phosphatase PP2A is required to resolve gamma-H2AX foci and complete DNA repair after exogenous DNA damage. Here we describe a three-protein PP4 phosphatase complex in mammalian cells, containing PP4C, PP4R2, and PP4R3beta, that specifically dephosphorylates ATR-mediated gamma-H2AX generated during DNA replication. PP4 efficiently dephosphorylates gamma-H2AX within mononucleosomes in vitro and does not directly alter ATR or checkpoint kinase activity, suggesting that PP4 acts directly on gamma-H2AX in cells. When the PP4 complex is silenced, repair of DNA replication-mediated breaks is inefficient, and cells are hypersensitive to DNA replication inhibitors, but not radiomimetic drugs. Therefore, gamma-H2AX elimination at DNA damage foci is required for DNA damage repair, but accomplishing this task involves distinct phosphatases with potentially overlapping roles.