NBS1 forms a complex with MRE11 and RAD50 (MRN) that is proposed to act on the upstream of two repair pathways of DNA double-strand break (DSB), homologous repair (HR) and non-homologous end joining (NHEJ). However, the function of Nbs1 in these processes has not fully been elucidated in mammals due to the lethal phenotype of cells and mice lacking Nbs1. Here, we have constructed mouse Nbs1-null embryonic fibroblasts and embryonic stem cells, through the Cre-loxP and sequential gene targeting techniques. We show that cells lacking Nbs1 display reduced HR of the single DSB in chromosomally integrated substrate, affecting both homology-directed repair (HDR) and single-stranded annealing pathways, and, surprisingly, increased NHEJ-mediated sequence deletion. Moreover, focus formation at DSBs and chromatin recruitment of the Nbs1 partners Rad50 and Mre11 as well as Rad51 and Brca1 are attenuated in these cells, whereas the NHEJ molecule Ku70 binding to chromatin is not affected. These data provide a novel insight into the function of MRN in the branching of DSB repair pathways. © 2006 European Molecular Biology Organization | All Rights Reserved.