Double strand breaks (DSBs) are the most deleterious of the DNA lesions that initiate genomic instability and promote tumorigenesis. Cells have evolved a complex protein network to detect, signal, and repair DSBs. In mammalian cells, a key component in this network is H2AX, which becomes rapidly phosphorylated at Ser(139) (γ-H2AX) at DSBs. Here we show that monoubiquitination of H2AX mediated by the RNF2-BMI1 complex is critical for the efficient formation of γ-H2AX and functions as a proximal regulator in DDR (DNA damage response). RNF2-BMI1 interacts with H2AX in a DNA damage-dependent manner and is required for monoubiquitination of H2AX at Lys(119)/Lys(120). As a functional consequence, we show that the H2AX K120R mutant abolishes H2AX monoubiquitination, impairs the recruitment of p-ATM (Ser(1981)) to DSBs, and thereby reduces the formation of γ-H2AX and the recruitment of MDC1 to DNA damage sites. These data suggest that monoubiquitination of H2AX plays a critical role in initiating DNA damage signaling. Consistent with these observations, impairment of RNF2-BMI1 function by siRNA knockdown or overexpression of the ligase-dead RNF2 mutant all leads to significant defects both in accumulation of γ-H2AX, p-ATM, and MDC1 at DSBs and in activation of NBS1 and CHK2. Additionally, the regulatory effect of RNF2-BMI1 on γ-H2AX formation is dependent on ATM. Lacking their ability to properly activate the DNA damage signaling pathway, RNF2-BMI1 complex-depleted cells exhibit impaired DNA repair and increased sensitivity to ionizing radiation. Together, our findings demonstrate a distinct monoubiquitination-dependent mechanism that is required for H2AX phosphorylation and the initiation of DDR.