Abstract: Genomic rearrangements are common, occur by largely unknown mechanisms, and can lead to human diseases. We previously demonstrated that some genome rearrangements occur in budding yeast through the fusion of two DNA sequences that contain limited sequence homology, lie in inverted orientation, and are within 5 kb of one another. This inverted repeat fusion reaction forms dicentric chromosomes, which are well-known intermediates to additional rearrangements. We have previously provided evidence indicating that an error of stalled or disrupted DNA replication forks can cause inverted repeat fusion. Here we analyze how checkpoint protein regulatory pathways known to stabilize stalled forks affect this form of instability. We find that two checkpoint pathways suppress inverted repeat fusion, and that their activities are distinguishable by their interactions with exonuclease 1 (Exo1). The checkpoint kinase Rad53 (Chk2) and recombination protein complex MRX(MRN) inhibit Exo1 in one pathway, whereas in a second pathway the ATR-like kinases Mec1 and Tel1, adaptor protein Rad9, and effector kinases Chk1 and Dun1 act independently of Exo1 to prevent inverted repeat fusion. We provide a model that indicates how in Rad53 or MRX mutants, an inappropriately active Exo1 may facilitate faulty template switching between nearby inverted repeats to form dicentric chromosomes. We further investigate the role of Rad53, using hypomorphic alleles of Rad53 and null mutations in Rad9 and Mrc1, and provide evidence that only local, as opposed to global, activity of Rad53 is sufficient to prevent inverted repeat fusion.