Palindromic sequences can form hairpin structures or cruciform extrusions, which render them susceptible to genomic rearrangements. A 197-bp long palindromic AT-rich repeat (PATRR17) is located within intron 40 of the neurofibromatosis type 1 (NF1) gene (17q11.2). Through comprehensive NF1 analysis, we identified six unrelated patients with a rearrangement involving intron 40 (five deletions and one reciprocal translocation t(14;17)(q32;q11.2)). We hypothesized that PATRR17 may be involved in these rearrangements thereby causing NF1. Breakpoint cloning revealed that PATRR17 was indeed involved in all of the rearrangements. As microhomology was present at all breakpoint junctions of the deletions identified, and PATRR17 partner breakpoints were located within 7.1 kb upstream of PATRR17, fork stalling and template switching/microhomology-mediated break-induced replication was the most likely rearrangement mechanism. For the reciprocal translocation case, a 51 bp insertion at the translocation breakpoints mapped to a short sequence within PATRR17, proximal to the breakpoint, suggesting a multiple stalling and rereplication process, in contrast to previous studies indicating a purely replication-independent mechanism for PATRR-mediated translocations. In conclusion, we show evidence that PATRR17 is a hotspot for pathogenic intragenic deletions within the NF1 gene and suggest a novel replication-dependent mechanism for PATRR-mediated translocation.