Using a substrate measuring deletion or inversion of an I-SceI-excised fragment and both accurate and inaccurate rejoining, we determined the impact of non-homologous end-joining (NHEJ) on mammalian chromosome rearrangements. Deletion is 2- to 8-fold more efficient than inversion, independent of the DNA ends structure. KU80 controls accurate rejoining, whereas in absence of KU mutagenic rejoining, particularly microhomology-mediated repair, occurs efficiently. In cells bearing both the NHEJ and a homologous recombination (HR) substrate containing a third I-SceI site, we show that NHEJ is at least 3.3-fold more efficient than HR, and translocation of the I-SceI fragment from the NHEJ substrate locus into the HR-I-SceI site can occur, but 50- to 100-fold less frequently than deletion. Deletions and translocations show both accurate and inaccurate rejoining, suggesting that they correspond to a mix of KU-dependent and KU-independent processes. Thus these processes should represent prominent pathways for DSB-induced genetic instability in mammalian cells.