Ku, a heterodimer of polypeptides of approximately 70 kDa and 80 kDa (Ku70 and Ku80, respectively), binds avidly to DNA double-strand breaks (DSBs). Mammalian cells defective in Ku are hypersensitive to ionizing radiation due to a deficiency in DSB repair. Here, we show that the simple inactivation of the Saccharomyces cerevisiae Ku70 homologue (Yku70p), does not lead to increased radiosensitivity. However, yku70 mutations enhance the radiosensitivity of rad52 strains, which are deficient in homologous recombination. Through establishing a rapid and reproducible in vivo plasmid rejoining assay, we show that Yku70p plays a crucial role in the repair of DSBs bearing cohesive termini. Whereas this damage is repaired accurately in YKU70 backgrounds, in yku70 mutant strains terminal deletions of up to several hundred bp occur before ligation ensues. Interestingly, this error-prone DNA repair pathway utilizes short homologies between the two recombining molecules and is thus highly reminiscent of a predominant form of DSB repair that operates in vertebrates. These data therefore provide evidence for two distinct and evolutionarily conserved illegitimate recombination pathways. One of these is accurate and Yku70p-dependent, whereas the other is error-prone and Yku70-independent. Furthermore, our studies suggest that Yku70 promotes genomic stability both by promoting accurate DNA repair and by serving as a barrier to error-prone repair processes.