The ribonuclease DIS3 is one of the most frequently mutated genes in the hematological cancer multiple myeloma, yet the basis of its tumor suppressor function in this disease remains unclear. Herein, exploiting the TCGA dataset, we found that DIS3 plays a prominent role in the DNA damage response. DIS3 inactivation causes genomic instability by increasing mutational load, and a pervasive accumulation of DNA:RNA hybrids that induces genomic DNA double‐strand breaks (DSBs). DNA:RNA hybrid accumulation also prevents binding of the homologous recombination (HR) machinery to double‐strand breaks, hampering DSB repair. DIS3‐inactivated cells become sensitive to PARP inhibitors, suggestive of a defect in homologous recombination repair. Accordingly, multiple myeloma patient cells mutated for DIS3 harbor an increased mutational burden and a pervasive overexpression of pro‐inflammatory interferon, correlating with the accumulation of DNA:RNA hybrids. We propose DIS3 loss in myeloma to be a driving force for tumorigenesis via DNA:RNA hybrid‐dependent enhanced genome instability and increased mutational rate. At the same time, DIS3 loss represents a liability that might be therapeutically exploited in patients whose cancer cells harbor DIS3 mutations. Synopsis The ribonuclease DIS3 is frequently mutated in the blood cancer multiple myeloma. Here, DIS3 inactivation is found to cause accumulation of DNA:RNA hybrids, as well as to increases interferon responses and reduce homologous recombination. DIS3 loss triggers a genome‐wide increase in DNA:RNA hybrids, which in turn leads to DNA fragmentation and genomic instability. Hybrids accumulation at the sites of DNA damage prevents BRCA1 binding to DNA, impairing homologous recombination‐based DNA repair. DIS3 loss is associated with increased mutational rate both in vitro and in patient samples with DIS3 mutations. Myeloma cells derived from patients presenting DIS3 mutations display an intense interferon response. DIS3 mutation in hematological cancer causes reduced homologous recombination repair, increased mutational burden, and overactivation of inflammatory interferon responses.