The ubiquitin-proteasome system (UPS) plays a crucial role in cellular homeostasis and its major role in genome stability and maintenance is rapidly emerging. Here, we identify the proteasomal shuttle factor ubiquilin-4 (UBQLN4) as a major component of the DNA damage response. We found a homozygous truncating mutation in the UBQLN4 gene in families with a pleiotropic autosomal recessive syndrome with clinical and cellular characteristics of genome instability disorders. UBQLN4 loss leads to cellular hypersensitivity to genotoxic stress and delayed repair of DNA double-strand breaks (DSBs). Furthermore, ATM-dependent phosphorylation of UBQLN4 on S318 is required for cellular protection against DNA damage and proper DSB repair. We demonstrate that UBQLN4 specifically interacts with ubiquitylated MRE11, which mediates early steps of the DSB response. Loss of UBQLN4 leads to retention of MRE11 at DSB sites, which in turn drives a non-physiological initiation of DNA end resection thereby enhancing homologous recombination-mediated DSB repair (HRR). Concomitantly, UBQLN4 depletion is associated with increased HRR activity in vitro and in vivo. In contrast, UBQLN4 over-expression represses HRR and favors DSB repair through non-homologous end joining. Moreover, we find that UBQLN4 is overexpressed in aggressive tumors, including high-risk neuroblastoma. In line with an HRR defect in such tumors, we observe that cell lines derived from these lesions display an actionable PARP1 inhibitor sensitivity. Abnormal UBQLN4 expression thus underlies genome instability-associated morbidity on the one hand and serve as a cancer biomarker on the other hand. Moreover, UBQLN4 may be a promising target for PARP1 inhibition in aggressive cancer.