Fanconi anemia (FA) is a multigenic disease of bone marrow failure and cancer susceptibility stemming from a failure to remove DNA crosslinks and other chromosomal lesions. Within the FA DNA damage response pathway, DNA-dependent monoubiquitinaton of FANCD2 licenses downstream events, while timely FANCD2 deubiquitination serves to extinguish the response. Here, we show with reconstituted biochemical systems, which we developed, that efficient FANCD2 deubiquitination by the USP1-UAF1 complex is dependent on DNA and DNA binding by UAF1. Surprisingly, we find that the DNA binding activity of the UAF1-associated protein RAD51AP1 can substitute for that of UAF1 in FANCD2 deubiquitination in our biochemical system. We also reveal the importance of DNA binding by UAF1 and RAD51AP1 in FANCD2 deubiquitination in the cellular setting. Our results provide insights into a key step in the FA pathway and help define the multifaceted role of the USP1-UAF1-RAD51AP1 complex in DNA damage tolerance and genome repair.