Double-strand break (DSB) repair pathways are critical for the maintenance of genomic integrity and the prevention of tumorigenesis in mammalian cells. Here, we present the development and validation of a novel assay to measure mutagenic non-homologous end-joining (NHEJ) repair in living cells, which is inversely related to canonical NHEJ and is based on the sequence-altering repair of a single site-specific DSB at an intrachromosomal locus. We have combined this mutagenic NHEJ assay with an established homologous recombination (HR) assay such that both pathways can be monitored simultaneously. In addition, we report the development of a ligand-responsive I-SceI protein, in which the timing and kinetics of DSB induction can be precisely controlled by regulating protein stability and cellular localization in cells. Using this system, we report that mutagenic NHEJ repair is suppressed in growth-arrested and serum-deprived cells, suggesting that end-joining activity in proliferating cells is more likely to be mutagenic. Collectively, the novel DSB repair assay and inducible I-SceI will be useful tools to further elucidate the complexities of NHEJ and HR repair.