The presence of repeated DNA sequences is a genomic liability, because interrepeat recombination can result in chromosomal rearrangements. The mismatch repair system prevents recombination between nonidentical repeats, but the mechanism of antirecombination has not been established. Although the MutS protein binds to base pair mismatches in heteroduplex DNA, the role of the MutL protein in preventing recombination is unknown. In a screen designed to identify new cellular functions that suppress deletion formation involving nonidentical DNA repeats, we isolated a mutL mutant having a separation-of-function phenotype. The mutant showed an increased frequency of deletions but not of mutations. The split phenotype is due to a decreased MutL level, indicating that recombination, but not replication editing, is highly sensitive to MutL level. By altering the MutL level, we found that the frequency of deletion-generating recombination is inversely related to the amount of cellular MutL. DNA sequence analysis of the recombined repeats shows that the tolerance of base pair mismatches in heteroduplex DNA is also inversely correlated with MutL level. Unlike recombination, correction of misincorporation errors by mismatch repair is insensitive to fluctuations in MutL level. Overproduction of MutS does not affect either of these phenotypes, suggesting that, unlike MutL, MutS is not limiting for mismatch repair activities. These results indicate that MutL (i) determines effective DNA homology in recombination processes and (ii) fine tunes the process of deletion formation involving repeated, diverged DNA sequences.