Replication by template switch is thought to mediate DNA damage-bypass and fillings of gaps. Gap-filling repair requires homologous recombination as well as Rad18- and Rad5-mediated proliferating cell nuclear antigen (PCNA) polyubiquitylation. However, it is unclear whether these processes are coordinated, and the physical evidence for Rad18–Rad5-dependent template switch at replication forks is still elusive. Here we show, using genetic and physical approaches, that in budding yeast (Saccharomyces cerevisiae) Rad18 is required for the formation of X-shaped sister chromatid junctions (SCJs) at damaged replication forks through a process involving PCNA polyubiquitylation and the ubiquitin-conjugating enzymes Mms2 and Ubc13. The Rad18–Mms2-mediated damage-bypass through SCJs requires the small ubiquitin-like modifier (SUMO)-conjugating enzyme Ubc9 and SUMOylated PCNA, and is coordinated with Rad51-dependent recombination events. We propose that the Rad18–Rad5–Mms2-dependent SCJs represent template switch events. Altogether, our results unmask a role for PCNA ubiquitylation and SUMOylation pathways in promoting transient damage-induced replication-coupled recombination events involving sister chromatids at replication forks.