Many carcinogens damage both DNA and protein constituents of chromatin, and it is unclear how cells respond to this compound injury. We examined activation of the main DNA damage-responsive kinase ATM and formation of DNA double-strand breaks (DSB) by formaldehyde (FA) that forms histone adducts and replication-blocking DNA-protein crosslinks (DPC). We found that low FA doses caused a strong and rapid activation of ATM signaling in human cells, which was ATR-independent and restricted to S-phase. High FA doses inactivated ATM via its covalent dimerization and formation of larger crosslinks. FA-induced ATM signaling showed higher CHK2 phosphorylation but much lower phospho-KAP1 relative to DSB inducers. Replication blockage by DPC did not produce damaged forks or detectable amounts of DSB during the main wave of ATM activation, which did not require MRE11. Chromatin-monitoring KAT5 (Tip60) acetyltransferase was responsible for acetylation and activation of ATM by FA. KAT5 and ATM were equally important for triggering of intra-S-phase checkpoint and ATM signaling promoted recovery of normal human cells after low-dose FA. Our results revealed a major role of the KAT5-ATM axis in protection of replicating chromatin against damage by the endogenous carcinogen FA.