We have used the recently determined crystal structures of Escherichia coli (E. coli) MutS, MutL and MutH to guide construction of 47 amino-acid substitutions in these proteins and analyzed their behavior in mismatch repair and recombination in vitro and in vivo. We find that the active site of the MutH endonuclease is composed of regions from two separate structural domains and that the C-terminal 5 residues of MutH influence both DNA binding and cleavage. We also find that the non-specific DNA-binding activity of MutL is required for mismatch repair and probably functions after strand cleavage by MutH. Alteration of residues in either the mismatch recognition domain, the ATPase active site, or the domain interfaces linking the two activities can diminish the differential binding of MutS to homoduplex versus heteroduplex and results in the loss of mismatch-specific MutH activation. Finally, every mutation that abolishes mismatch repair is deficient in blocking homeologous recombination, suggesting that mismatch repair and prevention of homeologous recombination use the same MutS-MutL complexes for signaling in E. coli.