Rad51 is a homolog of the bacterial RecA protein and is central for recombination in eukaryotes performing homology search and DNA strand exchange. Rad51 and RecA share a core ATPase domain that is structurally similar to the ATPase domains of helicases and the F1 ATPase. Rad51 has an additional N-terminal domain, whereas RecA protein has an additional C-terminal domain. Here we show that glycine 103 in the N-terminal domain of Saccharomyces cerevisiae Rad51 is important for binding to single-stranded and duplex DNA. The Rad51-G103E mutant protein is deficient in DNA strand exchange and ATPase activity due to a primary DNA binding defect. The N-terminal domain of Rad51 is connected to the ATPase core through an extended elbow linker that ensures flexibility of the N-terminal domain. Molecular modeling of the Rad51-G103E mutant protein shows that the negatively charged glutamate residue lies on the surface of the N-terminal domain facing a positively charged patch composed of Arg-260, His-302, and Lys-305 on the ATPase core domain. A possible structural explanation for the DNA binding defect is that a charge interaction between Glu-103 and the positive patch restricts the flexibility of the N-terminal domain. Rad51-G103E was identified in a screen for Rad51 interaction-deficient mutants and was shown to ablate the Rad54 interaction in two-hybrid assays (Krejci, L., Damborsky, J., Thomsen, B., Duno, M., and Bendixen, C. (2001) Mol. Cell. Biol. 21, 966-976). Surprisingly, we found that the physical interaction of Rad51-G103E with Rad54 was not affected. Our data suggest that the two-hybrid interaction defect was an indirect consequence of the DNA binding defect.