Inflammation is an early immune response against invading pathogens and damaged tissue. Although beneficial, uncontrolled inflammation leads to various diseases including cancer in a chronic setting. Peroxynitrite (PN) is a major reactive nitrogen species generated during inflammation. It produces various DNA lesions including 8-nitro-guanine which spontaneously converts into abasic sites, resulting in DNA strand breakage, and is suspected to be mutagenic. Here, we report the discovery of a previously unrecognized function of the human repair protein O6-alkylguanine-DNA alkyltransferase (hAGT or MGMT). We showed that hAGT through its active site nucleophilic Cys145 thiolate spontaneously reacts with 8-nitro-guanine in DNA to form a stable DNA-protein cross-link (DPC). Interestingly, the process of DPC formation provided protection from PN-mediated genome instability, growth arrest, and apoptosis. The Cys145 mutant of hAGT failed to form a DPC and was unable to protect cells from inflammation-associated PN-mediated cytotoxicity. Gel-shift, dot blot, and UV-vis assays showed formation of a covalent linkage between PN-damaged DNA and hAGT through its active site Cys145. Finally, expression of hAGT was found to be significantly increased by induced macrophages and PN. The data presented here clearly demonstrated hAGT as a dual-function protein that along with DNA repair is capable of maintaining genomic integrity and providing protection from the toxicity caused by PN-mediated DNA damage. Although DPCs are known to be detrimental to the cell, recently, multiple pathways have been identified in normal cells for their repair.