The genome-sequencing gold rush has facilitated the use of comparative genomics to uncover patterns of genome evolution, although their causal mechanisms remain elusive. One such trend, ubiquitous to prokarya and eukarya, is the association of insertion/deletion mutations (indels) with increases in the nucleotide substitution rate extending over hundreds of base pairs. The prevailing hypothesis is that indels are themselves mutagenic agents. Here, we employ population genomics data from Escherichia coli, Saccharomyces paradoxus, and Drosophila to provide evidence suggesting that it is not the indels per se but the sequence in which indels occur that causes the accumulation of nucleotide substitutions. We found that about two-thirds of indels are closely associated with repeat sequences and that repeat sequence abundance could be used to identify regions of elevated sequence diversity, independently of indels. Moreover, the mutational signature of indel-proximal nucleotide substitutions matches that of error-prone DNA polymerases. We propose that repeat sequences promote an increased probability of replication fork arrest, causing the persistent recruitment of error-prone DNA polymerases to specific sequence regions over evolutionary time scales. Experimental measures of the mutation rates of engineered DNA sequences and analyses of experimentally obtained collections of spontaneous mutations provide molecular evidence supporting our hypothesis. This study uncovers a new role for repeat sequences in genome evolution and provides an explanation of how fine-scale sequence contextual effects influence mutation rates and thereby evolution.