Fanconi anemia (FA) is an inherited bone marrow failure syndrome with extremely high risk of leukemic transformation. Here we investigate the relationship between DNA damage response (DDR) and leukemogenesis using the Fanca knockout mouse model. We found that chronic exposure of the Fanca-/- hematopoietic stem cells to DNA crosslinking agent mitomycin C in vivo leads to diminished DDR, and the emergence/expansion of pre-leukemia stem cells (pre-LSCs). Surprisingly, although genetic correction of Fanca deficiency in the pre-LSCs restores DDR and reduces genomic instability, but fails to prevent pre-LSC expansion or delay leukemia development in irradiated recipients. Furthermore, we identified transcription program underlying dysregulated DDR and cell migration, myeloid proliferation, and immune response in the Fanca-/- pre-LSCs. Forced expression of the downregulated DNA repair genes, Rad51c or Trp53i13, in the Fanca-/- pre-LSCs partially rescues DDR but has no effect on leukemia, whereas shRNA knockdown of the upregulated immune receptor genes Trem1 or Pilrb improves leukemia-related survival, but not DDR or genomic instability. Furthermore, Trem1 cooperates with diminished DDR in vivo to promote Fanca-/- pre-LSC expansion and leukemia development. Our study implicates diminishing DDR as a root cause of FA leukemogenesis, which subsequently collaborates with other signaling pathways for leukemogenic transformation.