Whole genome sequencing of cancer genomes has revealed a diversity of recurrent gross chromosomal rearrangements (GCRs) that are likely signatures of specific defects in DNA damage response pathways. However, inferring the underlying defects has been difficult due to insufficient information relating defects in DNA metabolism to GCR signatures. By analyzing over 95 mutant strains of Saccharomyces cerevisiae, we found that the frequency of GCRs that deleted an internal CAN1/URA3 cassette on chrV L while retaining a chrV L telomeric hph marker was significantly higher in tel1Δ, sae2Δ, rad53Δ sml1Δ, and mrc1Δ tof1Δ mutants. The hph-retaining GCRs isolated from tel1Δ mutants contained either an interstitial deletion dependent on non-homologous end-joining or an inverted duplication that appeared to be initiated from a double strand break (DSB) on chrV L followed by hairpin formation, copying of chrV L from the DSB toward the centromere, and homologous recombination to capture the hph-containing end of chrV L. In contrast, hph-containing GCRs from other mutants were primarily interstitial deletions (mrc1Δ tof1Δ) or inverted duplications (sae2Δ and rad53Δ sml1Δ). Mutants with impaired de novo telomere addition had increased frequencies of hph-containing GCRs, whereas mutants with increased de novo telomere addition had decreased frequencies of hph-containing GCRs. Both types of hph-retaining GCRs occurred in wild-type strains, suggesting that the increased frequencies of hph retention were due to the relative efficiencies of competing DNA repair pathways. Interestingly, the inverted duplications observed here resemble common GCRs in metastatic pancreatic cancer.