Accumulation of peptide-linked DNA breaks contributes to neurodegeration in humans. This is typified by defects in tyrosyl DNA phosphodiesterase 1 (TDP1) and human hereditary ataxia. TDP1 primarily operates at single-strand breaks (SSBs) created by oxidative stress or by collision of transcription machinery with topoisomerase I intermediates (Top1-CCs). Cellular and cell-free studies have shown that Top1 at stalled Top1-CCs is first degraded to a small peptide resulting in Top1-SSBs, which are the primary substrates for TDP1. Here we established an assay to directly compare Top1-SSBs and Top1-CCs. We subsequently employed this assay to reveal an increased steady state level of Top1-CCs in neural cells lacking Atm; the protein mutated in ataxia telangiectasia. Our data suggest that the accumulation of endogenous Top1-CCs in Atm-/- neural cells is primarily due to elevated levels of reactive oxygen species. Biochemical purification of Top1-CCs from neural cell extract and the use of Top1 poisons further confirmed a role for Atm during the formation/resolution of Top1-CCs. Finally, we report that global transcription is reduced in Atm-/- neural cells and fails to recover to normal levels following Top1-mediated DNA damage. Together, these data identify a distinct role for ATM during the formation/resolution of neural Top1-CCs and suggest that their accumulation contributes to the neuropathology of ataxia telangiectasia.