The structural maintenance of chromosomes (SMC) family of proteins supports mitotic proliferation, meiosis, and DNA repair to control genomic stability. Impairments in chromosome maintenance are linked to rare chromosome breakage disorders. Here, we have identified a chromosome breakage syndrome associated with severe lung disease in early childhood. Four children from two unrelated kindreds died of severe pulmonary disease during infancy following viral pneumonia with evidence of combined T and B cell immunodeficiency. Whole exome sequencing revealed biallelic missense mutations in the NSMCE3 (also known as NDNL2) gene, which encodes a subunit of the SMC5/6 complex that is essential for DNA damage response and chromosome segregation. The NSMCE3 mutations disrupted interactions within the SMC5/6 complex, leading to destabilization of the complex. Patient cells showed chromosome rearrangements, micronuclei, sensitivity to replication stress and DNA damage, and defective homologous recombination. This work associates missense mutations in NSMCE3 with an autosomal recessive chromosome breakage syndrome that leads to defective T and B cell function and acute respiratory distress syndrome in early childhood.