Classical non-homologous end joining (cNHEJ) and homologous recombination compete for the repair of double-stranded DNA breaks during the cell cycle. Homologous recombination is inhibited during the G1 phase of the cell cycle, but both pathways are active in the S and G2 phases. However, it is unclear why cNHEJ does not always outcompete homologous recombination during the S and G2 phases. Here we show that CYREN (cell cycle regulator of NHEJ) is a cell-cycle-specific inhibitor of cNHEJ. Suppression of CYREN allows cNHEJ to occur at telomeres and intrachromosomal breaks during the S and G2 phases, and cells lacking CYREN accumulate chromosomal aberrations upon damage induction, specifically outside the G1 phase. CYREN acts by binding to the Ku70/80 heterodimer and preferentially inhibits cNHEJ at breaks with overhangs by protecting them. We therefore propose that CYREN is a direct cell-cycle-dependent inhibitor of cNHEJ that promotes error-free repair by homologous recombination during cell cycle phases when sister chromatids are present.