Genome instability is a recurring feature of tumorigenesis. Mutation in MLL2, encoding a histone methyltransferase, is a driver in numerous different cancer types, but the mechanism is unclear. Here, we present evidence that MLL2 mutation results in genome instability. Mouse cells in which MLL2 gene deletion can be induced display elevated levels of sister chromatid exchange, gross chromosomal aberrations, 53BP1 foci, and micronuclei. Human MLL2 knockout cells are characterized by genome instability as well. Interestingly, MLL2 interacts with RNA polymerase II (RNAPII) and RECQL5, and, although MLL2 mutated cells have normal overall H3K4me levels in genes, nucleosomes in the immediate vicinity of RNAPII are hypomethylated. Importantly, MLL2 mutated cells display signs of substantial transcription stress, and the most affected genes overlap with early replicating fragile sites, show elevated levels of γH2AX, and suffer frequent mutation. The requirement for MLL2 in the maintenance of genome stability in genes helps explain its widespread role in cancer and points to transcription stress as a strong driver in tumorigenesis.