Budding yeast SGS1 and the human Bloom's syndrome (BS) gene, BLM, are homologues of the Escherichia coli recQ. Cells derived from BS patients are characterized by a dramatic increase in sister chromatid exchange (SCE). We previously reported that budding yeast cells deficient in SGS1 showed an increase in the frequency of recombination between unequal sister chromatids recombination (USCR). In this study, we examined the factors influencing the elevated SCR frequency in sgs1 disruptants. The increase in SCR frequency in sgs1 mutants was greatly reduced by disrupting the RAD52 or MSH2 gene, which is involved in mismatch repair. However, a plasmid carrying MSH2, having a missense mutation defective in mismatch repair complemented the reduced USCR in msh2 sgs1 mutants, suggesting that the function of Msh2 in mismatch repair is dispensable for USCR.