CAG/CTG repeat expansions cause over 13 neurological diseases that remain without a cure. Because longer tracts cause more severe phenotypes, contracting them may provide a therapeutic avenue. No currently known agent can specifically generate contractions. Using a GFP-based chromosomal reporter that monitors expansions and contractions in the same cell population, here we find that inducing double-strand breaks within the repeat tract causes instability in both directions. In contrast, the CRISPR-Cas9 D10A nickase induces mainly contractions independently of single-strand break repair. Nickase-induced contractions depend on the DNA damage response kinase ATM, whereas ATR inhibition increases both expansions and contractions in a MSH2- and XPA-dependent manner. We propose that DNA gaps lead to contractions and that the type of DNA damage present within the repeat tract dictates the levels and the direction of CAG repeat instability. Our study paves the way towards deliberate induction of CAG/CTG repeat contractions in vivo.