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Activation-induced cytidine deaminase (AID) is essential for class-switch recombination (CSR) and somatic hypermutation (SHM) of Ig genes. The AID C terminus is required for CSR, but not for S-region DNA double-strand breaks (DSBs) during CSR, and it is not required for SHM. AID lacking the C terminus (ΔAID) is a dominant negative (DN) mutant, because human patients heterozygous for this mutant fail to undergo CSR. In agreement, we show that ΔAID is a DN mutant when expressed in AID-sufficient mouse splenic B cells. To have DN function, ΔAID must have deaminase activity, suggesting that its ability to induce DSBs is important for the DN function. Supporting this hypothesis, Msh2-Msh6 have been shown to contribute to DSB formation in S regions, and we find in this study that Msh2 is required for the DN activity, because ΔAID is not a DN mutant in msh2(-/-) cells. Our results suggest that the DNA DSBs induced by ΔAID are unable to participate in CSR and might interfere with the ability of full-length AID to participate in CSR. We propose that ΔAID is impaired in its ability to recruit nonhomologous end joining repair factors, resulting in accumulation of DSBs that undergo aberrant resection. Supporting this hypothesis, we find that the S-S junctions induced by ΔAID have longer microhomologies than do those induced by full-length AID. In addition, our data suggest that AID binds Sμ regions in vivo as a monomer.