Homologous recombination (HR) is a conserved mechanism that repairs broken chromosomes via intact homologous sequences. How different genomic, chromatin and subnuclear contexts influence HR efficiency and outcome is poorly understood. We developed an assay to assess HR outcome by gene conversion (GC) and break-induced replication (BIR), and discovered that subtelomeric double-stranded breaks (DSBs) are preferentially repaired by BIR despite the presence of flanking homologous sequences. Overexpression of a silencing-deficient SIR3 mutant led to active grouping of telomeres and specifically increased the GC efficiency between subtelomeres. Thus, physical distance limits GC at subtelomeres. However, the repair efficiency between reciprocal intrachromosomal and subtelomeric sequences varies up to 15-fold, depending on the location of the DSB, indicating that spatial proximity is not the only limiting factor for HR EXO1 deletion limited the resection at subtelomeric DSBs and improved GC efficiency. The presence of repressive chromatin at subtelomeric DSBs also favoured recombination, by counteracting EXO1-mediated resection. Thus, repressive chromatin promotes HR at subtelomeric DSBs by limiting DSB resection and protecting against genetic information loss.