Protein phosphatase 2A (PP2A) functions as a potent tumor suppressor, but its mechanism(s) remains enigmatic. Specific disruption of PP2A by either expression of SV40 small tumor antigen or depletion of endogenous PP2A/C by RNA interference inhibits Ku DNA binding and DNA-PK activities, which results in suppression of DNA double-strand break (DSB) repair and DNA end-joining in association with increased genetic instability (i.e., chromosomal and chromatid breaks). Overexpression of the PP2A catalytic subunit (PP2A/C) enhances Ku and DNA-PK activities with accelerated DSB repair. Camptothecin-induced DSBs promote PP2A to associate with Ku 70 and Ku 86. PP2A directly dephosphorylates Ku as well as the DNA-PK catalytic subunit (DNA-PKcs) in vitro and in vivo, which enhances the formation of a functional Ku/DNA-PKcs complex. Intriguingly, PP2A promotes DSB repair in wild type mouse embryonic fibroblast (MEF) cells but has no such effect in Ku-deficient MEF cells, suggesting that the Ku 70/86 heterodimer is required for PP2A promotion of DSB repair. Thus, PP2A promotion of DSB repair may occur in a novel mechanism by activating the nonhomologous end-joining pathway through direct dephosphorylation of Ku and DNA-PKcs, which may contribute to maintenance of genetic stability.