The cellular response to double-strand breaks (DSBs) in DNA is a complex signalling network, mobilized by the nuclear protein kinase ataxia-telangiectasia mutated (ATM), which phosphorylates many factors in the various branches of this network. A main question is how ATM regulates DSB repair. Here, we identify the DNA repair enzyme polynucleotide kinase/phosphatase (PNKP) as an ATM target. PNKP phosphorylates 5'-OH and dephosphorylates 3'-phosphate DNA ends that are formed at DSB termini caused by DNA-damaging agents, thereby regenerating legitimate ends for further processing. We establish that the ATM phosphorylation targets on human PNKP-Ser 114 and Ser 126-are crucial for cellular survival following DSB induction and for effective DSB repair, being essential for damage-induced enhancement of the activity of PNKP and its proper accumulation at the sites of DNA damage. These findings show a direct functional link between ATM and the DSB-repair machinery.