Exposure to genotoxic agents, such as ionizing radiation (IR) produces DNA damage leading to DNA double-strand breaks (DSBs); IR toxicity is augmented when the DNA repair is impaired. We reported that radiosensitization by a PARP inhibitor (PARPi) was highly prominent in prostate cancer (PCa) cells expressing the TMPRSS2-ERG gene fusion protein. Here, we show that TMPRSS2-ERG blocks non-homologous end-joining (NHEJ) DNA repair by inhibiting DNA-PKcs. VCaP cells, which harbor TMPRSS2-ERG and PC3 cells that stably express it displayed γH2AX and 53BP1 foci constitutively, indicating persistent DNA damage that was absent if TMPRSS2-ERG was depleted by siRNA in VCaP cells. The extent of DNA damage was enhanced and associated with TMPRSS2-ERG’s ability to inhibit DNA-PKcs function, as indicated by its own phosphorylation (Thr2609, Ser2056) and that of its substrate, Ser1778-53BP1. DNA-PKcs deficiency caused by TMPRSS2-ERG destabilized critical NHEJ components on chromatin. Thus, XRCC4 was not recruited to chromatin, with retention of other NHEJ core factors being reduced. DNA-PKcs autophosphorylation was restored to the level of parental cells when TMPRSS2-ERG was depleted by siRNA. Following IR, TMPRSS2-ERG-expressing PC3 cells had elevated Rad51 foci and homologous recombination (HR) activity, indicating that HR compensated for defective NHEJ in these cells, hence addressing why TMPRSS2-ERG alone did not lead to radiosensitization. However, the presence of TMPRSS2-ERG, by inhibiting NHEJ DNA repair, enhanced PARPi-mediated radiosensitization. IR in combination with PARPi resulted in enhanced DNA damage in TMPRSS2-ERG-expressing cells. Thus, by inhibiting NHEJ, TMPRSS2-ERG provides a synthetic lethal interaction with PARPi in PCa patients expressing TMPRSS2-ERG.