Mutations in the S. cerevisiae RAD27 (also called RTH1 or YKL510) gene result in a strong mutator phenotype. In this study we show that the majority of the resulting mutations have a structure in which sequences ranging from 5-108 bp flanked by direct repeats of 3-12 bp are duplicated. Such mutations have not been previously detected at high frequency in the mutation spectra of mutator strains. Epistasis analysis indicates that RAD27 does not play a major role in MSH2-dependent mismatch repair. Mutations in RAD27 cause increased rates of mitotic crossing over and are lethal in combination with mutations in RAD51 and RAD52. These observations suggest that the majority of replication errors that accumulate in rad27 strains are processed by double-strand break repair, while a smaller percentage are processed by a mutagenic repair pathway. The duplication mutations seen in rad27 mutants occur both in human tumors and as germline mutations in inherited human diseases.