We have analyzed the CTF1 gene, identified in a screen for mutants with decreased chromosome transmission fidelity and shown to correspond to the previously identified chl1 mutation. Chl1 null mutants exhibited a 200-fold increase in the rate of chromosome III missegregation per cell division, and near wild-type rates of marker homozygosis on this chromosome by mitotic recombination. Analysis of the segregation of a marker chromosome indicated that sister chromatid loss (1:0 segregation) and sister chromatid non-disjunction (2:0 segregation) contributed equally to chromosome missegregation. A genomic clone of CHL1 was isolated and used to map its physical position on chromosome XVI. Nucleotide sequence analysis of CHL1 revealed a 2.6 kb open reading frame with a 99 kd predicted protein sequence that contained two PEST sequences and was 23% identical to the coding region of a nucleotide excision repair gene, RAD3. Domains of homology between these two predicted protein sequences included a helix-turn-helix motif and an ATP binding site containing a helicase consensus. Mutants lacking the CHL1 gene product are viable and display two striking, and perhaps interrelated, phenotypes: extreme chromosome instability and a delay in cell cycle progression in G2/M. This delay is independent of the cell cycle checkpoint that requires the function of the RAD9 gene.