Non-homologous end joining (NHEJ) is the main repair pathway for DNA double-strand breaks (DSBs) in cells with limited 5' resection. To better understand how overhang polarity of chromosomal DSBs affects NHEJ, we made site-specific 5'-overhanging DSBs (5' DSBs) in yeast using an optimized zinc finger nuclease at an efficiency that approached HO-induced 3' DSB formation. When controlled for the extent of DSB formation, repair monitoring suggested that chromosomal 5' DSBs were rejoined more efficiently than 3' DSBs, consistent with a robust recruitment of NHEJ proteins to 5' DSBs. Ligation-mediated qPCR revealed that Mre11-Rad50-Xrs2 rapidly modified 5' DSBs and facilitated protection of 3' DSBs, likely through recognition of overhang polarity by the Mre11 nuclease. Next-generation sequencing revealed that NHEJ at 5' DSBs had a higher mutation frequency, and validated the differential requirement of Pol4 polymerase at 3' and 5' DSBs. The end processing enzyme Tdp1 did not impact joining fidelity at chromosomal 5' DSBs as in previous plasmid studies, although Tdp1 was recruited to only 5' DSBs in a Ku-independent manner. These results suggest distinct DSB handling based on overhang polarity that impacts NHEJ kinetics and fidelity through differential recruitment and action of DSB modifying enzymes.