Loss of ataxia telangiectasia mutated (ATM) kinase, a key factor of the DNA damage response (DDR) pathway, causes the cancer predisposing and neurodegenerative syndrome ataxia-telangiectasia (A-T). To investigate the mechanisms of neurodegeneration, we have reprogrammed fibroblasts from ATM-null A-T patients and normal controls to pluripotency (human-induced pluripotent stem cells), and derived from these neural precursor cells able to terminally differentiate into post-mitotic neurons positive to >90% for β-tubulin III+/microtubule-associated protein 2+. We show that A-T neurons display similar voltage-gated potassium and sodium currents and discharges of action potentials as control neurons, but defective expression of the maturation and synaptic markers SCG10, SYP and PSD95 (postsynaptic density protein 95). A-T neurons exhibited defective repair of DNA double-strand breaks (DSBs) and repressed phosphorylation of ATM substrates (e.g., γH2AX, Smc1-S966, Kap1-S824, Chk2-T68, p53-S15), but normal repair of single-strand breaks, and normal short- and long-patch base excision repair activities. Moreover, A-T neurons were resistant to apoptosis induced by the genotoxic agents camptothecin and trabectedin, but as sensitive as controls to the oxidative agents. Most notably, A-T neurons exhibited abnormal accumulation of topoisomerase 1-DNA covalent complexes (Top1-ccs). These findings reveal that ATM deficiency impairs neuronal maturation, suppresses the response and repair of DNA DSBs, and enhances Top1-cc accumulation. Top1-cc could be a risk factor for neurodegeneration as they may interfere with transcription elongation and promote transcriptional decline.