Proper histone levels are critical for transcription, chromosome segregation, and other chromatin-mediated processes(1-7). In Saccharomyces cerevisiae, the histones H2A and H2B are encoded by two gene pairs, named HTA1-HTB1 and HTA2-HTB2 (ref. 8). Previous studies have demonstrated that when HTA2-HTB2 is deleted, HTA1-HTB1 dosage compensates at the transcriptional level(4,9). Here we show that a different mechanism of dosage compensation, at the level of gene copy number, can occur when HTA1-HTB1 is deleted. In this case, HTA2-HTB2 amplifies via creation of a new, small, circular chromosome. This duplication, which contains 39 kb of chromosome II, includes HTA2-HTB2, the histone H3-H4 locus HHT1-HHF1, a centromere and origins of replication. Formation of the new chromosome occurs by recombination between two Ty1 retrotransposon elements that flank this region. Following meiosis, recombination between these two particular Ty1 elements occurs at a greatly elevated level in hta1-htb1Delta mutants, suggesting that a decreased level of histones H2A and H2B specifically stimulates this amplification of histone genes. Our results demonstrate another mechanism by which histone gene dosage is controlled to maintain genomic integrity.