Ataxia-telangiectasia (A-T) and Nijmegen breakage syndrome (NBS) are recessive genetic disorders with susceptibility to cancer and similar cellular phenotypes. The protein product of the gene responsible for A-T, designated ATM, is a member of a family of kinases characterized by a carboxy-terminal phosphatidylinositol 3-kinase-like domain. The NBS1 protein is specifically mutated in patients with Nijmegen breakage syndrome and forms a complex with the DNA repair proteins Rad50 and Mrel1. Here we show that phosphorylation of NBS1, induced by ionizing radiation, requires catalytically active ATM. Complexes containing ATM and NBS1 exist in vivo in both untreated cells and cells treated with ionizing radiation. We have identified two residues of NBS1, Ser 278 and Ser 343 that are phosphorylated in vitro by ATM and whose modification in vivo is essential for the cellular response to DNA damage. This response includes S-phase checkpoint activation, formation of the NBS1/Mrel1/Rad50 nuclear foci and rescue of hypersensitivity to ionizing radiation. Together, these results demonstrate a biochemical link between cell-cycle checkpoints activated by DNA damage and DNA repair in two genetic diseases with overlapping phenotypes.