R-loops, three-stranded structures that form when transcripts hybridize to chromosomal DNA, are potent agents of genome instability. This instability has been explained by the ability of R-loops to induce DNA damage. Here, we show that persistent R-loops also compromise DNA repair. Depleting endogenous RNase H activity impairs R-loop removal in budding yeast, causing DNA damage that occurs preferentially in the repetitive ribosomal DNA locus (rDNA). We analyzed the repair kinetics of this damage and identified mutants that modulate repair. Our results indicate that persistent R-loops in the rDNA induce damage that is slowly repaired by break-induced replication (BIR). Furthermore, R-loop induced BIR at the rDNA leads to lethal repair intermediates when RNA polymerase I elongation is compromised. We present a model to explain how removal of R-loops by RNase H is critical in ensuring the efficient repair of R-loop induced DNA damage by pathways other than BIR.