To maintain genomic integrity, double-strand breaks (DSBs) in chromosomal DNA must be repaired. In mammalian systems, the analysis of the repair of chromosomal DSBs has been limited by the inability to introduce well-defined DSBs in genomic DNA. In this study, we created specific DSBs in mouse chromosomes for the first time, using an expression system for a rare-cutting endonuclease, I-SceI. A genetic assay has been devised to monitor the repair of DSBs, whereby cleavage sites for I-SceI have been integrated into the mouse genome in two tandem neomycin phosphotransferase genes. We find that cleavage of the I-SceI sites is very efficient, with at least 12% of stably transfected cells having at least one cleavage event and, of these, more than 70% have undergone cleavage at both I-SceI sites. Cleavage of both sites in a fraction of clones deletes 3.8 kb of intervening chromosomal sequences. We find that the DSBs are repaired by both homologous and nonhomologous mechanisms. Nonhomologous repair events frequently result in small deletions after rejoining of the two DNA ends. Some of these appear to occur by simple blunt-ended ligation, whereas several others may occur through annealing of short regions of terminal homology. The DSBs are apparently recombinogenic, stimulating gene targeting of a homologous fragment by more than 2 orders of magnitude. Whereas gene-targeted clones are nearly undetectable without endonuclease expression, they represent approximately 10% of cells transfected with the I-SceI expression vector. Gene targeted clones are of two major types, those that occur by two-sided homologous recombination with the homologous fragment and those that occur by one-sided homologous recombination. Our results are expected to impact a number of areas in the study of mammalian genome dynamics, including the analysis of the repair of DSBs and homologous recombination and, potentially, molecular genetic analyses of mammalian genomes.