Small, approximately 10-kilobase microhomology-mediated tandem duplications are abundant in the genomes of BRCA1-linked but not BRCA2-linked breast cancer. Here we define the mechanism underlying this rearrangement signature. We show that, in primary mammalian cells, BRCA1, but not BRCA2, suppresses the formation of tandem duplications at a site-specific chromosomal replication fork barrier imposed by the binding of Tus proteins to an array of Ter sites. BRCA1 has no equivalent role at chromosomal double-stranded DNA breaks, indicating that tandem duplications form specifically at stalled forks. Tandem duplications in BRCA1 mutant cells arise by a replication restart-bypass mechanism terminated by end joining or by microhomology-mediated template switching, the latter forming complex tandem duplication breakpoints. Solitary DNA ends form directly at Tus-Ter, implicating misrepair of these lesions in tandem duplication formation. Furthermore, BRCA1 inactivation is strongly associated with ~10 kilobase tandem duplications in ovarian cancer. This tandem duplicator phenotype may be a general signature of BRCA1-deficient cancer.