In this work, we examine regulation of DNA methyltransferase 1 (DNMT1) by the DNA damage inducible protein, GADD45α. We used a system to induce homologous recombination (HR) at a unique double-strand DNA break in a GFP reporter in mammalian cells. After HR, the repaired DNA is hypermethylated in recombinant clones showing low GFP expression (HR-L expressor class), while in high expressor recombinants (HR-H clones) previous methylation patterns are erased. GADD45α, which is transiently induced by double-strand breaks, binds to chromatin undergoing HR repair. Ectopic overexpression of GADD45α during repair increases the HR-H fraction of cells (hypomethylated repaired DNA), without altering the recombination frequency. Conversely, silencing of GADD45α increases methylation of the recombined segment and amplifies the HR-L expressor (hypermethylated) population. GADD45α specifically interacts with the catalytic site of DNMT1 and inhibits methylation activity in vitro. We propose that double-strand DNA damage and the resulting HR process involves precise, strand selected DNA methylation by DNMT1 that is regulated by GADD45α. Since GADD45α binds with high avidity to hemimethylated DNA intermediates, it may also provide a barrier to spreading of methylation during or after HR repair.