We introduce a concept of the Mach-Zehnder-Fano interferometer by inserting a cavity exhibiting Fano resonance into a conventional interferometer. By employing the scattering-matrix approach, we demonstrate that the transmission is sensitive to a position of the cavity such that an asymmetric structure exhibits a series of narrow resonances with almost perfect reflection. We discuss how to implement this novel geometry in two-dimensional photonic crystals and use direct numerical simulations to demonstrate novel regimes of the resonant transmission and reflection.PACS numbers: 42.25. Bs, 42.68.Mj, 92.60.Ta The Mach-Zehnder interferometer (MZI) was suggested more than a hundred years ago, and it is still a key element in integrated optics being implemented into design of various photonic devices including modulators, switches, filters, and multiplexers. The recent developments moved this concept toward nanoscales, and several studies employed ring-resonator structures in order to low the power threshold [1,2,3,4,5,6,7,8] which can demonstrate very efficient nonlinear response and can be easily tuned. A novel advantage of using additional resonant cavities has been also discussed [9,10,11,12,13].In this Letter we introduce a concept of the MachZehnder-Fano interferometer that can be realized on various platforms such as photonic crystals or ring resonators that possess effective discreteness of periodic photonic structures for engineering the transmission properties. Side-coupled cavity with a resonant state in the transmission band provides a sharp variation of the scattering phase, which allows to alter the transmission properties of the whole structure in a narrow frequency range. Photonic crystals allow to implement this idea in the form of very compact structures.The physics of the Fano resonance is explained by an interference between a continuum and discrete state [14]. The simplest realization is a one-dimensional discrete array (continuum state) with a side-coupled defect (discrete state). In such a system scattering waves can either bypass the defect or interact with it [15]. The π phase shift at the resonance results in destructive interference at the output, leading to resonant suppression of the transmission. Usually, each Fano resonance can be associated with a particular resonant state of the side-coupled defect [16]. Similarly, we demonstrate below that MZI with a symmetric Fano defect displays a resonant state with a well-defined suppression of the transmission. However, for an asymmetric Fano defect the transmission exhibits more than one resonance, and it can be understood in terms of the interaction between two continua with one discrete state [14]. Indeed, both arms of MZI can be considered as two continua, and the side-coupled defect as a discrete state. Since both the arms are coupled, the defect becomes effectively coupled to both of them but with different strengths. As a result, we may obtain two resonances instead of one. We introduce the main concept for an effective discrete model, ...