To repair a DNA double-strand break (DSB) by homologous recombination (HR), the 5'-terminated strand of the DSB must be resected. The human MRE11-RAD50-NBS1 (MRN) and CtIP proteins were implicated in the initiation of DNA end resection, but the underlying mechanism remained undefined. Here, we show that CtIP is a co-factor of the MRE11 endonuclease activity within the MRN complex. This function is absolutely dependent on CtIP phosphorylation that includes the key cyclin-dependent kinase target motif at Thr-847. Unlike in yeast, where the Xrs2/NBS1 subunit is dispensable in vitro, NBS1 is absolutely required in the human system. The MRE11 endonuclease in conjunction with RAD50, NBS1, and phosphorylated CtIP preferentially cleaves 5'-terminated DNA strands near DSBs. Our results define the initial step of HR that is particularly relevant for the processing of DSBs bearing protein blocks.