It has been suggested that introduction of double-strand DNA breaks into human chromosomes can lead to gross chromosomal rearrangements (GCRs) through improper repair mechanisms, and that these GCRs may be leukemogenic through the loss of tumor suppressor genes or the creation of fusion oncogenes. Using the human histiocytic lymphoma cell line U937, we developed a model system in which we were able to introduce a double-strand DNA break (DSB) in vivo at a predetermined location, and subsequently examine the ensuing chromosomal changes flanking the breakage site. In this model, U937 cells are stably transfected with a construct that contains the 18 bp recognition site for a rare cutting endonuclease, I-SceI, whose recognition sequence is not normally present in the human genome. The I-SceI site is placed between a strong constitutive promoter (EF1alpha) and the Herpes simplex virus thymidine kinase (HSV-tk) gene, which serves as a negative selectable marker by conferring ganciclovir (GCV) sensitivity to the cells. Following transfection of an I-SceI expression vector, double-strand DNA breakage occurs and abrogatesHSV-tk expression, leading to a dramatic increase in GCV resistant cells. We showed that, even in the abscence of GCV selection, the IsceI enzyme was able to cleave its recognition sequence in at least half of the transfected cells. The predominant type of rearrangement detected following the appearance of a double-strand break was an interstitial deletion. These deletions typically displayed uneven recession of free DNA ends flanking the cleavage site, generally resulting in either very short (<10 bp) or very long (>1000) bp deletions extending into the EF1alpha promoter and homogeneous deletions of 100–1700 bp into the HSV-tk gene. Moreover, in many clones, nucleotide microhomologies of 1–6 basepairs, palindromes, or both were detected at the breakpoint junctions, suggesting repair via a non-homologous end joining (NHEJ) mechanism.. We also showed that in 25 % of the recovered clones the DSB was repaired by formation of direct or inverted repeats derived from the breakpoint junction. Several clones showed similarly complex rearrangements, including short nucleotide insertions, inversions and duplications. Finally, approximately 4.5% (7/150) of the clones demonstrated insertion events that involved integration of nucleotide sequences derived from distant genomic regions, including LINE elements, coding regions of endogenous genes and sequences exhibiting known genomic instability. These insertions may have been derived via reverse transcription of mRNA sequences; alternatively the distant genomic regions may have served as templates for the inserted sequences, or genomic DNA fragments may have been directly incorporated into the I-SceI-induced break. A step-by-step modification of this loss of function selection scheme will provide a platform for studying DNA rearrangements induced by faulty dsDNA repair.