The activities of many DNA-repair proteins are controlled through reversible covalent modification by ubiquitin and ubiquitin-like molecules. Nonhomologous end-joining (NHEJ) is the predominant DNA double-strand break (DSB) repair pathway in mammalian cells and is initiated by DSB ends being recognized by the Ku70/Ku80 (Ku) heterodimer. By using MLN4924, an anti-cancer drug in clinical trials that specifically inhibits conjugation of the ubiquitin-like protein, NEDD8, to target proteins, we demonstrate that NEDD8 accumulation at DNA-damage sites is a highly dynamic process. In addition, we show that depleting cells of the NEDD8 E2-conjugating enzyme, UBE2M, yields ionizing radiation hypersensitivity and reduced cell survival following NHEJ. Finally, we demonstrate that neddylation promotes Ku ubiquitylation after DNA damage and release of Ku and Ku-associated proteins from damage sites following repair. These studies provide insights into how the NHEJ core complex dissociates from repair sites and highlight its importance for cell survival following DSB induction.