Gene conversion is a common outcome of double-strand break (DSB) repair in yeast. Prior studies revealed that DSB-induced gene conversion tracts are often short (<53 bp), unidirectional, and biased toward promoter-proximal (5') markers. In those studies, broken ends had short, non-homologous termini. For the present study we created plasmid x chromosome, chromosomal direct repeat and allelic recombination substrates in which donor alleles carried mutant HO sites (HOinc--not cleaved) at the same position as cleavable HO sites in recipient alleles. In these substrates, broken ends are almost completely homologous to donor alleles, differing only at the three HOinc mutations. These mutations serve as markers very close to, or within, the four-base overhang produced by HO nuclease. We identified extremely short tracts (<12 bp) and many tracts were highly directional, extending <2 bp on one side of the DSB. We thought that terminal homology would promote bidirectional tracts, but found instead that unidirectional tracts were more frequent. Interestingly, substrates with terminal homology displayed enhanced 3' conversion, and in several cases conversion bias was reversed toward 3' markers. These results are discussed in relation to factors that may influence tract length and directionality, including heteroduplex DNA formation, transcription, replication and mismatch repair.