Missense mutations in ATM kinase, a master regulator of DNA damage responses, are found in many cancers, but their impact on ATM function and implications for cancer therapy are largely unknown. Here we report that 72% of cancer-associated ATM mutations are missense mutations that are enriched around the kinase domain. Expression of kinase-dead ATM (Atm(KD/-)) is more oncogenic than loss of ATM (Atm(-/-)) in mouse models, leading to earlier and more frequent lymphomas with Pten deletions. Kinase-dead ATM protein (Atm-KD), but not loss of ATM (Atm-null), prevents replication-dependent removal of Topo-isomerase I-DNA adducts at the step of strand cleavage, leading to severe genomic instability and hypersensitivity to Topo-isomerase I inhibitors. Correspondingly, Topo-isomerase I inhibitors effectively and preferentially eliminate Atm(KD/-), but not Atm-proficientor Atm(-/-) leukemia in animal models. These findings identify ATM kinase-domain missense mutations as a potent oncogenic event and a biomarker for Topo-isomerase I inhibitor based therapy.