The mismatch repair pathway (MMR) is essential for removing DNA polymerase errors, thereby maintaining genomic stability. Loss of MMR function increases mutation frequency and is associated with tumorigenesis. However, how MMR is executed at active DNA replication forks is unclear. This has important implications for understanding how MMR repairs O6-methylguanine/thymidine (MeG/T) mismatches created upon exposure to DNA alkylating agents. If MeG/T lesion recognition by MMR initiates mismatch excision, the reinsertion of a mismatched thymidine during resynthesis could initiate futile repair cycles. One consequence of futile repair cycles might be a disruption of overall DNA replication in the affected cell. Herein, we show that in MMR-proficient HeLa cancer cells, treatment with a DNA alkylating agent slows S phase progression, yet cells still progress into the next cell cycle. In the first S phase following treatment, they activate ataxia telangiectasia and Rad3-related (ATR)-Checkpoint Kinase 1 (Chk1) signaling, which limits DNA damage, while inhibition of ATR kinase activity accelerates DNA damage accumulation and sensitivity to the DNA alkylating agent. We also observed that exposure of human embryonic stem cells to alkylation damage severely compromised DNA replication in a MMR-dependent manner. These cells fail to activate the ATR-Chk1 signaling axis, which may limit their ability to handle replication stress. Accordingly, they accumulate double-strand breaks and undergo immediate apoptosis. Our findings implicate the MMR-directed response to alkylation damage as a replication stress inducer, suggesting that repeated MMR processing of mismatches may occur that can disrupt S phase progression.