Chromosome rearrangements can form when incorrect ends are matched during end joining (EJ) repair of multiple chromosomal double-strand breaks (DSBs). We tested whether the ATM kinase limits chromosome rearrangements via suppressing incorrect end utilization during EJ repair of multiple DSBs. For this, we developed a system for monitoring EJ of two tandem DSBs that can be repaired using correct ends (Proximal-EJ) or incorrect ends (Distal-EJ, which causes loss of the DNA between the DSBs). In this system, two DSBs are induced in a chromosomal reporter by the meganuclease I-SceI. These DSBs are processed into non-cohesive ends by the exonuclease Trex2, which leads to the formation of I-SceI-resistant EJ products during both Proximal-EJ and Distal-EJ. Using this method, we find that genetic or chemical disruption of ATM causes a substantial increase in Distal-EJ, but not Proximal-EJ. We also find that the increase in Distal-EJ caused by ATM disruption is dependent on classical non-homologous end joining (c-NHEJ) factors, specifically DNA-PKcs, Xrcc4, and XLF. We present evidence that Nbs1-deficiency also causes elevated Distal-EJ, but not Proximal-EJ, to a similar degree as ATM-deficiency. In addition, to evaluate the roles of these factors on end processing, we examined Distal-EJ repair junctions. We found that ATM and Xrcc4 limit the length of deletions, whereas Nbs1 and DNA-PKcs promote short deletions. Thus, the regulation of end processing appears distinct from that of end utilization. In summary, we suggest that ATM is important to limit incorrect end utilization during c-NHEJ.