DNA double-strand breaks are normal consequences of cell division and differentiation and must be repaired faithfully to maintain genome stability. Two mechanistically distinct pathways are known to efficiently repair double-strand breaks: homologous recombination and Ku-dependent non-homologous end joining. Recently, a third, less characterized repair mechanism, named microhomology-mediated end joining (MMEJ), has received increasing attention. MMEJ repairs DNA breaks via the use of substantial microhomology and always results in deletions. Furthermore, it probably contributes to oncogenic chromosome rearrangements and genetic variation in humans. Here, we summarize the genetic attributes of MMEJ from several model systems and discuss the relationship between MMEJ and 'alternative end joining'. We propose a mechanistic model for MMEJ and highlight important questions for future research.