Mutations in the XPD gene can give rise to three phenotypically distinct disorders: xeroderma pigmentosum (XP), trichothiodystrophy (TTD) or combined XP and Cockayne syndrome (CS) (XP/CS). The role of Xeroderma Pigmentosum group D protein (XPD) in nucleotide excision repair explains the increased risk of skin cancer in XP patients but not all the clinical phenotypes found in XP/CS or TTD patients. Here, we describe that the XPD-defective UV5 cell line is impaired in transcription-associated recombination (TAR), which can be reverted by the introduction of the wild-type XPD gene expressed from a vector. UV5 cells are defective in TAR, despite having intact transcription and homologous recombination (HR) repair of DNA double-strand breaks (DSBs). Interestingly, we find reduced spontaneous HR in XPD-defective cells, suggesting that transcription underlies a portion of spontaneous HR events. We also report that transcription-coupled repair (TCR)-defective cells, mutated in the Cockayne syndrome B (CSB) protein, have a defect in TAR, but not in DSB-induced HR. However, the TAR defect may be associated with a general transcription defect in CSB-deficient cells. In conclusion, we show a novel role for the XPD protein in TAR, linking TAR with TCR.