How tumour suppressor p53 bifurcates cell cycle arrest and apoptosis and executes these distinct pathways is not clearly understood. We show that BAX and PUMA promoters harbour an identical MAR element and are transcriptional targets of SMAR1. On mild DNA damage, SMAR1 selectively represses BAX and PUMA through binding to the MAR independently of inducing p53 deacetylation through HDAC1. This generates an anti-apoptotic response leading to cell cycle arrest. Importantly, knockdown of SMAR1 induces apoptosis, which is abrogated in the absence of p53. Conversely, apoptotic DNA damage results in increased size and number of promyelocytic leukaemia (PML) nuclear bodies with consequent sequestration of SMAR1. This facilitates p53 acetylation and restricts SMAR1 binding to BAX and PUMA MAR leading to apoptosis. Thus, our study establishes MAR as a damage responsive cis element and SMAR1-PML crosstalk as a switch that modulates the decision between cell cycle arrest and apoptosis in response to DNA damage.