DNA damage, rearrangement, and mutation of the human genome are the basis of carcinogenesis and thought to be avoided at all costs. An exception is the adaptive immune system where lymphocytes utilize programmed DNA damage to effect antigen receptor diversification. Both B and T lymphocytes diversify their antigen receptors through RAG1/2 mediated recombination, but B cells undergo two additional processes—somatic hypermutation (SHM) and class-switch recombination (CSR), both initiated by activation-induced cytidine deaminase (AID). AID deaminates cytidines in DNA resulting in U:G mismatches that are processed into point mutations in SHM or double-strand breaks in CSR. Although AID activity is focused at Immunoglobulin (Ig) gene loci, it also targets a wide array of non-Ig genes including oncogenes associated with lymphomas. Here, we review the molecular basis of AID regulation, targeting, and initiation of CSR and SHM, as well as AID's role in generating chromosome translocations that contribute to lymphomagenesis.