DNA double-strand breaks (DSBs) are repaired by nonhomologous end-joining (NHEJ) and homologous recombination (HR). The NHEJ/HR decision is under complex regulation and involves DNA-dependent protein kinase (DNA-PKcs). HR is elevated in DNA-PKcs null cells, but suppressed by DNA-PKcs kinase inhibitors, suggesting that kinase-inactive DNA-PKcs (DNA-PKcs-KR) would suppress HR. Here we use a direct repeat assay to monitor HR repair of DSBs induced by I-SceI nuclease. Surprisingly, DSB-induced HR in DNA-PKcs-KR cells was 2- to 3-fold above the elevated HR level of DNA-PKcs null cells, and approximately 4- to 7-fold above cells expressing wild-type DNA-PKcs. The hyperrecombination in DNA-PKcs-KR cells compared to DNA-PKcs null cells was also apparent as increased resistance to DNA crosslinks induced by mitomycin C. ATM phosphorylates many HR proteins, and ATM is expressed at a low level in cells lacking DNA-PKcs, but restored to wild-type level in cells expressing DNA-PKcs-KR. Several clusters of phosphorylation sites in DNA-PKcs, including the T2609 cluster, which is phosphorylated by DNA-PKcs and ATM, regulate access of repair factors to broken ends. Our results indicate that ATM-dependent phosphorylation of DNA-PKcs-KR contributes to the hyperrecombination phenotype. Interestingly, DNA-PKcs null cells showed more persistent ionizing radiation-induced RAD51 foci (but lower HR levels) compared to DNA-PKcs-KR cells, consistent with HR completion requiring RAD51 turnover. ATM may promote RAD51 turnover, suggesting a second (not mutually exclusive) mechanism by which restored ATM contributes to hyperrecombination in DNA-PKcs-KR cells. We propose a model in which DNA-PKcs and ATM coordinately regulate DSB repair by NHEJ and HR.