The budding yeast Saccharomyces cerevisiae has been used by humans for millennia to make wine, beer and bread. More recently, it became a key model organism for studies of eukaryotic biology and for genomic analysis. However, relatively little is known about the natural lifestyle and population genetics of yeast. One major question is whether genetically diverse yeast strains mate and recombine in the wild. We developed a method to infer the evolutionary history of a species from genome sequences of multiple individuals and applied it to whole-genome sequence data from three strains of Saccharomyces cerevisiae and the sister species Saccharomyces paradoxus. We observed a pattern of sequence variation among yeast strains in which ancestral recombination events lead to a mosaic of segments with shared genealogy. Based on sequence divergence and the inferred median size of shared segments (approximately 2,000 bp), we estimated that although any two strains have undergone approximately 16 million cell divisions since their last common ancestor, only 314 outcrossing events have occurred during this time (roughly one every 50,000 divisions). Local correlations in polymorphism rates indicate that linkage disequilibrium in yeast should extend over kilobases. Our results provide the initial foundation for population studies of association between genotype and phenotype in S. cerevisiae.