Spinocerebellar ataxia type 3 (SCA3), also known as Machado-Joseph disease (MJD), is an untreatable autosomal dominant neurodegenerative disease, and the most common such inherited ataxia worldwide. The mutation in SCA3 is the expansion of a polymorphic CAG tri-nucleotide repeat sequence in the C-terminal coding region of the ATXN3 gene at chromosomal locus 14q32.1. The mutant ATXN3 protein encoding expanded glutamine (polyQ) sequences interacts with multiple proteins in vivo, and is deposited as aggregates in the SCA3 brain. A large body of literature suggests that the loss of function of the native ATNX3-interacting proteins that are deposited in the polyQ aggregates contributes to cellular toxicity, systemic neurodegeneration and the pathogenic mechanism in SCA3. Nonetheless, a significant understanding of the disease etiology of SCA3, the molecular mechanism by which the polyQ expansions in the mutant ATXN3 induce neurodegeneration in SCA3 has remained elusive. In the present study, we show that the essential DNA strand break repair enzyme PNKP (polynucleotide kinase 3'-phosphatase) interacts with, and is inactivated by, the mutant ATXN3, resulting in inefficient DNA repair, persistent accumulation of DNA damage/strand breaks, and subsequent chronic activation of the DNA damage-response ataxia telangiectasia-mutated (ATM) signaling pathway in SCA3. We report that persistent accumulation of DNA damage/strand breaks and chronic activation of the serine/threonine kinase ATM and the downstream p53 and protein kinase C-δ pro-apoptotic pathways trigger neuronal dysfunction and eventually neuronal death in SCA3. Either PNKP overexpression or pharmacological inhibition of ATM dramatically blocked mutant ATXN3-mediated cell death. Discovery of the mechanism by which mutant ATXN3 induces DNA damage and amplifies the pro-death signaling pathways provides a molecular basis for neurodegeneration due to PNKP inactivation in SCA3, and for the first time offers a possible approach to treatment.