The caps on the ends of chromosomes, called telomeres, keep the ends of chromosomes from appearing as DNA double-strand breaks (DSBs) and prevent chromosome fusion. However, subtelomeric regions are sensitive to DSBs, which in normal cells is responsible for ionizing radiation-induced cell senescence and protection against oncogene-induced replication stress, but promotes chromosome instability in cancer cells that lack cell cycle checkpoints. We have previously reported that I-SceI endonuclease-induced DSBs near telomeres in a human cancer cell line are much more likely to generate large deletions and gross chromosome rearrangements (GCRs) than interstitial DSBs, but found no difference in the frequency of I-SceI-induced small deletions at interstitial and subtelomeric DSBs. We now show that inhibition of MRE11 3'-5' exonuclease activity with Mirin reduces the frequency of large deletions and GCRs at both interstitial and subtelomeric DSBs, but has little effect on the frequency of small deletions. We conclude that large deletions and GCRs are due to excessive processing of DSBs, while most small deletions occur during classical nonhomologous end joining (C-NHEJ). The sensitivity of subtelomeric regions to DSBs is therefore because they are prone to undergo excessive processing, and not because of a deficiency in C-NHEJ in subtelomeric regions.