Fanconi anemia (FA) is a rare inherited recessive disease caused by mutations in one of fifteen genes known to encode FA pathway components. In response to DNA damage, nuclear FA proteins associate into high molecular weight complexes through a cascade of post-translational modifications and physical interactions, followed by the repair of damaged DNA. Hematopoietic cells are particularly sensitive to the loss of these interactions, and bone marrow failure occurs almost universally in FA patients. FA as a disease is further characterized by cancer susceptibility, which highlights the importance of the FA pathway in tumor suppression, and will be the focus of this review. Acute myeloid leukemia is the most common cancer type, often subsequent to bone marrow failure. However, FA patients are also at an extreme risk of squamous cell carcinoma (SCC) of the head and neck and gynecological tract, with an even greater incidence in those individuals who have received a bone marrow transplant and recovered from hematopoietic disease. FA tumor suppression in hematopoietic versus epithelial compartments could be mechanistically similar or distinct. Definition of compartment specific FA activities is now critical to assess the effects of today’s bone marrow failure treatments on tomorrow’s solid tumor development. It is our hope that current therapies can then be optimized to decrease the risk of malignant transformation in both hematopoietic and epithelial cells. Here we review our current understanding of the mechanisms of action of the Fanconi anemia pathway as it contributes to stress responses, DNA repair and squamous cell carcinoma susceptibility.