Functional analysis of the XRCC genes continues to make an important contribution to the understanding of mammalian DNA double-strand break repair processes and mechanisms of genetic instability leading to cancer. New data implicate XRCC genes in long-standing questions, such as how homologous recombination (HR) intermediates are resolved and how DNA replication slows in the presence of damage (intra-S checkpoint). Examining the functions of XRCC genes involved in non-homologous end joining (NHEJ), paradoxical roles in repair fidelity and telomere maintenance have been found. Thus, XRCC5-7 (DNA-PK)-dependent NHEJ commonly occurs with fidelity, perhaps by aligning ends accurately in the absence of sequence microhomologies, but NHEJ-deficient mice show reduced frequencies of mutation. NHEJ activity seems to be involved in both mitigating and mediating telomere fusions; however, defective NHEJ can lead to telomere elongation, while loss of HR activity leads to telomere shortening. The correct functioning of XRCC genes involved in both HR and NHEJ is important for genetic stability, but loss of each pathway leads to different consequences, with defects in HR additionally leading to mitotic disruption and aneuploidy. Confirmation that these responses are likely to contribute to cancer induction and/or progression, is given by studies of humans and mice with XRCC gene disruptions: those affecting NHEJ show increased lymphoid tumours, while those affecting HR lead to breast cancer and perhaps to gynaecological tumours.