The nucleoli are subdomains of the nucleus that form around actively transcribed ribosomal RNA (rRNA) genes. The highly repetitive and transcribed nature of the rRNA genes (rDNA) by RNA polymerase I (Pol I) poses a challenge for DNA repair and replication machineries. Here, we profile the nucleolar proteome and the chromatin landscape of stalled replication sites upon rDNA damage tocharacterize the early steps of nucleolar DNA damage response (nDDR). We observed early dynamics in nucleolar-nucleoplasmic proteome localization and identified nucleolar replication stress signatures involving chromatin remodeling networks, transcription-replication conflicts and DNA repair. Our findings define localized surveillance mechanisms that activate the nDDR. Further, we identified that upon rDNA damage, nucleolar RNA Polymerase (Pol) II binds to intergenic rDNA sequences and generates R-loops (DNA:RNA hybrid structures) that are essential for recruiting nDDR factors. Using a boutique CRISPR-Cas9 synthetic lethal screen of DNA repair factors with inhibitors of RNA Pol I transcription, we identified an unexpected protective role for the DNA translocase RAD54L in nDDR. Loss of Rad54L increases nucleolar R-loops and rDNA damage leading to defects in nucleolar structure and enhanced sensitivity to PARP and RNA Pol I inhibitors. Altogether, our study uncovers localized surveillance networks within the nucleolus that respond to rDNA damage. These insights expand our understanding of the molecular mechanisms governing nDDR and opens new avenues for developing nDDR-targeting therapies.