Homologous recombination (HR) is crucial for maintaining genome integrity by repairing DNA double-strand breaks (DSBs) and rescuing collapsed replication forks. In contrast, uncontrolled HR can lead to chromosome translocations, loss of heterozygosity, and deletion of repetitive sequences. Controlled HR is particularly important for the preservation of repetitive sequences of the ribosomal gene (rDNA) cluster. Here we show that recombinational repair of a DSB in rDNA in Saccharomyces cerevisiae involves the transient relocalization of the lesion to associate with the recombination machinery at an extranucleolar site. The nucleolar exclusion of Rad52 recombination foci entails Mre11 and Smc5-Smc6 complexes and depends on Rad52 SUMO (small ubiquitin-related modifier) modification. Remarkably, mutations that abrogate these activities result in the formation of Rad52 foci within the nucleolus and cause rDNA hyperrecombination and the excision of extrachromosomal rDNA circles. Our study also suggests a key role of sumoylation for nucleolar dynamics, perhaps in the compartmentalization of nuclear activities.