The switching of yeast mating-type alleles involves a transposition of a copy of a sequence from HML or HMR to replace the sequences at MAT. Using diploid strains of yeast we have discovered that about 1% of the homothalic conversions of MAT alleles are accompanied by large intrachromosomal rearrangements. These rearrangements are highly specific fusions of part of MAT either with HMR (to produce a deficiency ring chromosome). We conclude that the mechanism of MAT conversions involves a highly specific pairing between the homologous sequences at MAT and the donor genes HML or HMR followed by a specialized gene conversion event, in which the original allele is replaced by a sequence copied from HMR or HML. At about a 1% frequency conversion of the MAT locus is accompanied by a reciprocal recombination event that results in an intrachromosomal deletion. This same preferential pairing is reflected in a high frequency (> 10(-3)) of site-specific mitotic recombination between MAT alleles on differenat chromosomes. A gene conversion model also allows us to explain the "illegal" transpositions of MAT alleles to HMR or HML that occur when normal excision of MAT is prevented.