DNA molecules that integrate into yeast chromosomes during yeast transformation do so by homologous recombination. We have studied the way in which circular and linear molecules recombine with homologous chromosomal sequences. We show that DNA ends are highly recombinogenic and interact directly with homologous sequences. Circular hybrid plasmids can integrate by a single reciprocal crossover, but only at a low frequency. Restriction enzyme digestion within a region homologous to yeast chromosomal DNA greatly enhances the efficiency of integration. Furthermore, if two restriction cuts are made within the same homologous sequence, thereby removing an internal segment of DNA, the resulting deleted-linear molecules are still able to transform at a high frequency. Surprisingly, the integration of these gapped-linear molecules results in replacement of the missing segment using chromosomal information. The final structure is identical to that obtained from integration of a circular molecule. The integration of linear and gapped-linear molecules, but not of circular molecules, is blocked by the rad52-1 mutation. Consideration of models for plasmid integration and gene conversion suggests that RAD52 may be involved in the DNA repair synthesis required for these processes. Implications of this work for the isolation of integrative transformants, fine-structure mapping, and the cloning of mutations are discussed.