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DNA replication is sensitive to damage in the template. To bypass lesions and complete replication, cells activate recombination‐mediated (error‐free) and translesion synthesis‐mediated (error‐prone) DNA damage tolerance pathways. Crucial for error‐free DNA damage tolerance is template switching, which depends on the formation and resolution of damage‐bypass intermediates consisting of sister chromatid junctions. Here we show that a chromatin architectural pathway involving the high mobility group box protein Hmo1 channels replication‐associated lesions into the error‐free DNA damage tolerance pathway mediated by Rad5 and PCNA polyubiquitylation, while preventing mutagenic bypass and toxic recombination. In the process of template switching, Hmo1 also promotes sister chromatid junction formation predominantly during replication. Its C‐terminal tail, implicated in chromatin bending, facilitates …