The Saccharomyces cerevisiae Shu complex, consisting of Shu1, Shu2, Csm2 and Psy3, promotes error-free homologous recombination (HR) by an unknown mechanism. Recent structural analysis of two Shu proteins, Csm2 and Psy3, has revealed that these proteins are Rad51 paralogues and mediate DNA binding of this complex. We show in vitro that the Csm2-Psy3 heterodimer preferentially binds synthetic forked DNA or 3'-DNA overhang substrates resembling structures used during HR in vivo. We find that Csm2 interacts with Rad51 and the Rad51 paralogues, the Rad55-Rad57 heterodimer and that the Shu complex functions in the same epistasis group as Rad55-Rad57. Importantly, Csm2's interaction with Rad51 is dependent on Rad55, whereas Csm2's interaction with Rad55 occurs independently of Rad51. Consistent with the Shu complex containing Rad51 paralogues, the methyl methanesulphonate sensitivity of Csm2 is exacerbated at colder temperatures. Furthermore, Csm2 and Psy3 are needed for efficient recruitment of Rad55 to DNA repair foci after DNA damage. Finally, we observe that the Shu complex preferentially promotes Rad51-dependent homologous recombination over Rad51-independent repair. Our data suggest a model in which Csm2-Psy3 recruit the Shu complex to HR substrates, where it interacts with Rad51 through Rad55-Rad57 to stimulate Rad51 filament assembly and stability, promoting error-free repair.