Ataxia Telangiectasia Mutated (ATM) signaling is essential for the repair of a subset of DNA double-strand breaks (DSBs); however, its precise role is unclear. Here, we show that ≤25% of DSBs require ATM signaling for repair, and this percentage correlates with increased chromatin but not damage complexity. Importantly, we demonstrate that heterochromatic DSBs are generally repaired more slowly than euchromatic DSBs, and ATM signaling is specifically required for DSB repair within heterochromatin. Significantly, knockdown of the transcriptional repressor KAP-1, an ATM substrate, or the heterochromatin-building factors HP1 or HDAC1/2 alleviates the requirement for ATM in DSB repair. We propose that ATM signaling temporarily perturbs heterochromatin via KAP-1, which is critical for DSB repair/processing within otherwise compacted/inflexible chromatin. In support of this, ATM signaling alters KAP-1 affinity for chromatin enriched for heterochromatic factors. These data suggest that the importance of ATM signaling for DSB repair increases as the heterochromatic component of a genome expands.