The post‐translational modification of DNA repair and checkpoint proteins by ubiquitin and small ubiquitin‐like modifier (SUMO) critically orchestrates the DNA damage response (DDR). The ubiquitin ligase RNF4 integrates signaling by SUMO and ubiquitin, through its selective recognition and ubiquitination of SUMO‐modified proteins. Here, we define a key new determinant for target discrimination by RNF4, in addition to interaction with SUMO. We identify a nucleosome‐targeting motif within the RNF4 RING domain that can bind DNA and thereby enables RNF4 to selectively ubiquitinate nucleosomal histones. Furthermore, RNF4 nucleosome‐targeting is crucially required for the repair of TRF2‐depleted dysfunctional telomeres by 53BP1‐mediated non‐homologous end joining.