SUMMARY Analyses of chromosomal aberrations in human genetic disorders have revealed that inverted repeat sequences (IRs) often co-localize with endogenous chromosomal instability and breakage hotspots. Approximately 80% of all IRs in the human genome are short (<100 bp), yet the mutagenic potential of such short cruciform-forming sequences has not been characterized. Here, we found that short IRs are enriched at translocation breakpoints in human cancer, and stimulate the formation of DNA double-strand breaks (DSBs) and deletions in mammalian and yeast cells. We provide evidence for replication-related mechanisms of IR-induced genetic instability and a novel XPF cleavage-based mechanism independent of DNA replication. These new discoveries implicate short IRs as endogenous sources of DNA breakage involved in disease etiology, and suggest that these repeats represent a feature of genome plasticity that may contribute to the evolution of the human genome by providing a means for diversity within the population.