Abstract Background Unrepaired DNA double-stranded breaks (DSBs) cause chromosomal rearrangements, loss of genetic information, neoplastic transformation or cell death. The nonhomologous end joining (NHEJ) pathway, catalyzing sequence-independent direct rejoining of DSBs, is a crucial mechanism for repairing both stochastically occurring and developmentally programmed DSBs. In lymphocytes, NHEJ is critical for both development and genome stability. NHEJ defects lead to severe combined immunodeficiency (SCID) and lymphoid cancer predisposition in both mice and humans. While NHEJ has been thoroughly investigated in lymphocytes, the importance of NHEJ in other cell types, especially with regard to tumor suppression, is less well documented. We previously reported evidence that the NHEJ pathway functions to suppress a range of nonlymphoid tumor types, including various classes of sarcomas, by unknown mechanisms. Results Here we investigate roles for the NHEJ factor ARTEMIS in multipotent mesenchymal stem/progenitor cells (MSCs), as putative sarcomagenic cells of origin. We demonstrate a key role for ARTEMIS in sarcoma suppression in a sensitized mouse tumor model. In this context, we found that ARTEMIS deficiency led to chromosomal damage but, paradoxically, enhanced resistance and proliferative potential in primary MSCs subjected to various stresses. Gene expression analysis revealed abnormally regulated stress response, cell proliferation, and signal transduction pathways in ARTEMIS-defective MSCs. Finally, we identified candidate regulatory genes that may, in part, mediate a stress-resistant, hyperproliferative phenotype in preneoplastic ARTEMIS-deficient MSCs. Conclusions Our discoveries suggest that Art prevents genome damage and restrains proliferation in MSCs exposed to various stress stimuli. We propose that deficiency leads to a preneoplastic state in primary MSCs and is associated with aberrant proliferative control and cellular stress resistance. Thus, our data reveal surprising new roles for ARTEMIS and the NHEJ pathway in normal MSC function and fitness relevant to tumor suppression in mesenchymal tissues.