Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR) and CRISPR-associated (Cas) systems in bacteria and archaea use RNA-guided nuclease activity to provide adaptive immunity against invading foreign nucleic acids. Here, we report the use of type II bacterial CRISPR-Cas system in Saccharomyces cerevisiae for genome engineering. The CRISPR-Cas components, Cas9 gene and a designer genome targeting CRISPR guide RNA (gRNA), show robust and specific RNA-guided endonuclease activity at targeted endogenous genomic loci in yeast. Using constitutive Cas9 expression and a transient gRNA cassette, we show that targeted double-strand breaks can increase homologous recombination rates of single- and double-stranded oligonucleotide donors by 5-fold and 130-fold, respectively. In addition, co-transformation of a gRNA plasmid and a donor DNA in cells constitutively expressing Cas9 resulted in near 100% donor DNA recombination frequency. Our approach provides foundations for a simple and powerful genome engineering tool for site-specific mutagenesis and allelic replacement in yeast.