Significance Mismatch repair pathway (MMR)-mediated mismatch correction has largely been recapitulated in the test tube using mismatch-containing DNA substrates. However, a long-standing question remains: How does MMR respond to ^Me G/T mismatches caused by alkylation damage, and does this affect cellular replication forks? We demonstrate that MMR-mediated processing of ^Me G/T mismatches creates replication stress, perhaps due to iterative futile repair cycles that affects DNA replication. Activation of an ensuing ATR-Chk1–mediated replication stress response becomes important for mitigating DNA damage accumulation and prolonging cell survival. This study provides evidence that MMR processing may disturb replication forks encountering alkylation damage, which has important implications for sensitivity to DNA alkylating agents and for the MMR mechanism.