DNA end-resection and nuclear actin-based movements orchestrate clustering of double-strand breaks (DSBs) into homology-directed repair (HDR) domains. Here, we analyze how actin nucleation by ARP2/3 affects damage-dependent and -independent 3D genome reorganization and facilitates pathologic repair. We observe that DNA damage, followed by ARP2/3-dependent establishment of repair domains enhances local chromatin insulation at a set of damage-proximal boundaries and affects compartment organization genome-wide. Nuclear actin polymerization also promotes interactions between DSBs, which in turn facilitates aberrant intra- and inter-chromosomal rearrangements. Notably, BRCA1 deficiency, which decreases end-resection, DSB mobility, and subsequent HDR, nearly abrogates recurrent translocations between AsiSI DSBs. In contrast, loss of functional BRCA1 yields unique translocations genome-wide, reflecting a critical role in preventing spontaneous genome instability and subsequent rearrangements. Our work establishes that the assembly of DSB repair domains is coordinated with multiscale alterations in genome architecture that enable HDR despite increased risk of translocations with pathologic potential.