Small, approximately 10-kilobase microhomology-mediated tandem duplications are abundant in the genomes of BRCA1-linked but not BRCA2-linked breast cancer. Here we define the mechanism underlying this rearrangement signature. We show that, in primary mammalian cells, BRCA1, but not BRCA2, suppresses the formation of tandem duplications at a site-specific chromosomal replication fork barrier imposed by the binding of Tus proteins to an array of Ter sites. BRCA1 has no equivalent role at chromosomal double-stranded DNA breaks, indicating that tandem duplications form specifically at stalled forks. Tandem duplications in BRCA1 mutant cells arise by a replication restart-bypass mechanism terminated by end joining or by microhomology-mediated template switching, the latter forming complex tandem duplication breakpoints. Solitary DNA ends form directly at Tus–Ter, implicating misrepair of these lesions in tandem duplication formation. Furthermore, BRCA1 inactivation is strongly associated with ~10 kilobase tandem duplications in ovarian cancer. This tandem duplicator phenotype may be a general signature of BRCA1-deficient cancer.