Double-strand break (DSB) induced gene conversion in Saccharomyces cerevisiae during meiosis and MAT switching is mediated primarily by mismatch repair of heteroduplex DNA (hDNA). We used nontandem ura3 duplications containing palindromic frameshift insertion mutations near an HO nuclease recognition site to test whether mismatch repair also mediates DSB-induced mitotic gene conversion at a non-MAT locus. Palindromic insertions included in hDNA are expected to produce a stem-loop mismatch, escape repair, and segregate to produce a sectored (Ura+/-) colony. If conversion occurs by gap repair, the insertion should be removed on both strands, and converted colonies will not be sectored. For both a 14-bp palindrome, and a 37-bp near-palindrome, approximately 75% of recombinant colonies were sectored, indicating that most DSB-induced mitotic gene conversion involves mismatch repair of hDNA. We also investigated mismatch repair of well-repaired markers flanking an unrepaired palindrome. As seen in previous studies, these additional markers increased loop repair (likely reflecting corepair). Among sectored products, few had additional segregating markers, indicating that the lack of repair at one marker is not associated with inefficient repair at nearby markers. Clear evidence was obtained for low levels of short tract mismatch repair. As seen with full gene conversions, donor alleles in sectored products were not altered. Markers on the same side of the DSB as the palindrome were involved in hDNA less often among sectored products than nonsectored products, but markers on the opposite side of the DSB showed similar hDNA involvement among both product classes. These results can be explained in terms of corepair, and they suggest that mismatch repair on opposite sides of a DSB involves distinct repair tracts.