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Phosphorylation of H2AX (gamma H2AX) is an early sign of DNA damage induced by replication stalling. However, the role of H2AX in the repair of this type of DNA damage is still unclear. In this study, we used an inactivated adeno-associated virus (AAV) to induce a stalled replication fork signal and investigate the function of gamma H2AX. The cellular response to AAV provides a unique model to study gamma H2AX function, because the infection causes pannuclear H2AX phosphorylation without any signs of damage to the host genome. We found that pannuclear gamma H2AX formation is a result of ATR overactivation and diffusion but is independent of ATM. The inhibition of H2AX with RNA interference or the use of H2AX-deficient cells showed that gamma H2AX is dispensable for the formation and maintenance of DNA repair foci induced by stalled replication. However, in the absence of H2AX, the AAV-containing cells showed proteosome-dependent degradation of p21, followed by caspase-dependent mitotic catastrophe. In contrast, H2AX-proficient cells as well as H2AX-complemented H2AX(-/-) cells reacted by increasing p21 levels and arresting the cell cycle. The results establish a new role for H2AX in the p53/p21 pathway and indicate that H2AX is required for p21-induced cell cycle arrest after replication stalling.