We have previously shown direct-repeat recombination events leading to loss of a plasmid integrated at the GAL10 locus in Saccharomyces cerevisiae are stimulated by transcription of the region. We have examined the role of two recombination- and repair-defective mutations, rad1 and rad52, on direct repeat recombination in transcriptionally active and inactive sequences. We show that the RAD52 gene is required for transcription-stimulated recombination events leading to loss of the integrated plasmid. Similarly, Gal+ events between the duplicated repeats that retain the integrated plasmid DNA (Gal+ Ura+ replacement events) are reduced 20-fold in the rad52 mutant in sequences that are constitutively expressed. In contrast, in sequences that are not expressed, the rad52 mutation reduces plasmid loss events by only twofold and Gal+ Ura+ replacements by fourfold. We also observe an increase in disome-associated plasmid loss events in the rad52 mutant, indicative of chromosome gain. This event is not affected by expression of the region. Plasmid loss events in rad1 mutant strains are reduced only twofold in transcriptionally active sequences and are not affected in sequences that are repressed. However, the rad1 and rad52 double mutant shows a decrease in plasmid loss events greater than the sum of the decreases in the rates of this event displayed by either single mutant in both constitutive and repressed DNA, indicating a synergistic interaction between these two genes. The synergism is limited to recombination since the rad1 rad52 double mutant is no more sensitive when compared with either single mutant in its ability to survive radiation damage. Finally, the recombination pathway that remains in the double mutant is positively affected by transcription of the region.