Escape from apoptosis and increased genomic instability resulting from defective DNA repair processes are often associated with cancer development, aging and stem cell defects. Adult stem cells play an essential role in the maintenance of normal tissue. Removal of superfluous, damaged and/or dangerous cells is a critical process to maintain tissue homeostasis and protect against malignancy. Yet much remains to be learned about the mechanisms by which normal stem and progenitor cells respond to environmental and therapeutic genotoxic insults. Here, we have used the hematopoietic system as a model to investigate how cancer-associated mutations affect the behaviors of specific stem and progenitor cell populations. Our work during the first year of the CIRM New Faculty award has revealed the differential use of DNA double-strand break repair pathways in quiescent and proliferative hematopoietic stem cells (HSCs), which has clear implications for human health. Most adult stem cell populations, including HSCs, remain in a largely quiescent (G0), or resting, cell cycle state. This quiescent status is widely considered to be an essential protective mechanism stem cells use to minimize endogenous stress caused by cellular respiration and DNA replication. However, our studies demonstrate that quiescence may also have detrimental and mutagenic effects. We found both quiescent and proliferating HSCs to be similarly protected from DNA damaging genotoxic insults due to the expression and activation of cell type specific protective mechanisms. We demonstrate that both quiescent and proliferating HSCs resolve DNA damage with similar efficiencies but use different repair pathways. Quiescent HSCs preferentially utilize nonhomologous end joining (NHEJ) – an error-prone DNA repair mechanism – while proliferating HSCs essentially use homologous recombination (HR) – a high-fidelity DNA repair mechanism. Furthermore, we show that NHEJ-mediated repair in HSCs is associated with acquisition of genomic rearrangements. These findings suggest that the quiescent status of HSCs can, on one hand, be protective by limiting cell-intrinsic stresses but, on the other hand, be detrimental by forcing HSCs to repair damaged DNA with an error-prone mechanism that can generate mutations and eventually cause hematological malignancies. Our results have broad implications for cancer development and provide the beginning of a molecular understanding of why HSCs, despite being protected, are more likely than other cells in the hematopoietic system (i.e., myeloid progenitors) to become transformed. They also partially explain the loss of function occurring in HSCs with age, as it is likely that over a lifetime HSCs have acquired and accumulated numerous NHEJ-mediated mutations that hinder their cellular performance. Finally, our findings may have direct clinical applications for minimizing secondary cancer development. Many solid tumors and hematological malignancies are currently treated with DNA damaging agents, which may result in therapy-induced myeloid leukemia. Our results suggest that it might be beneficial to induce HSCs to cycle before initiating treatment, to avoid inadvertently mutating the patient’s own HSCs by forcing them to undergo DNA repair using an error-prone mutagenic mechanism.