The activation induced cytidine deaminase (AID) protein is known to initiate somatic hypermutation, gene conversion or switch recombination by cytidine deamination within the immunoglobulin loci. Using chromosomally integrated fluorescence reporter transgenes, we demonstrate a new recombinogenic activity of AID leading to intra- and intergenic deletions via homologous recombination of sequence repeats. Repeat recombination occurs at high frequencies even when the homologous sequences are hundreds of bases away from the positions of AID-mediated cytidine deamination, suggesting DNA end resection before strand invasion. Analysis of recombinants between homeologous repeats yielded evidence for heteroduplex formation and preferential migration of the Holliday junctions to the boundaries of sequence homology. These findings broaden the target and off-target mutagenic potential of AID and establish a novel system to study induced homologous recombination in vertebrate cells.DOI: http://dx.doi.org/10.7554/eLife.03110.001.