Mms21, a subunit of the Smc5/6 complex, possesses an E3 ligase activity for the Small Ubiquitin-like MOdifier (SUMO). Here we show that the mms21-CH mutation, which inactivates Mms21 ligase activity, causes increased accumulation of gross chromosomal rearrangements (GCRs) selected in the dGCR assay. These dGCRs are formed by non-allelic homologous recombination between divergent DNA sequences mediated by Rad52-, Rrm3- and Pol32-dependent break-induced replication. Combining mms21-CH with sgs1Δ caused a synergistic increase in GCRs rates, indicating the distinct roles of Mms21 and Sgs1 in suppressing GCRs. The mms21-CH mutation also caused increased rates of accumulating uGCRs mediated by breakpoints in unique sequences as revealed by whole genome sequencing. Consistent with the accumulation of endogenous DNA lesions, mms21-CH mutants accumulate increased levels of spontaneous Rad52 and Ddc2 foci and had a hyper-activated DNA damage checkpoint. Together, these findings support that Mms21 prevents the accumulation of spontaneous DNA lesions that cause diverse GCRs.