In Saccharomyces cerevisiae, Rad52 protein plays an essential role in the repair of DNA double-stranded breaks (DSBs). Rad52 and its orthologs possess the unique capacity to anneal single-stranded DNA (ssDNA) complexed with its cognate ssDNA-binding protein, RPA. This annealing activity is used in multiple mechanisms of DSB repair: single-stranded annealing, synthesis-dependent strand annealing, and cross-over formation. Here we report that the S. cerevisiae DNA strand exchange protein, Rad51, prevents Rad52-mediated annealing of complementary ssDNA. Efficient inhibition is ATP-dependent and involves a specific interaction between Rad51 and Rad52. Free Rad51 can limit DNA annealing by Rad52, but the Rad51 nucleoprotein filament is even more effective. We also discovered that the budding yeast Rad52 paralog, Rad59 protein, partially restores Rad52-dependent DNA annealing in the presence of Rad51, suggesting that Rad52 and Rad59 function coordinately to enhance recombinational DNA repair either by directing the processed DSBs to repair by DNA strand annealing or by promoting second end capture to form a double Holliday junction. This regulation of Rad52-mediated annealing suggests a control function for Rad51 in deciding the recombination path taken for a processed DNA break; the ssDNA can be directed to either Rad51-mediated DNA strand invasion or to Rad52-mediated DNA annealing. This channeling determines the nature of the subsequent repair process and is consistent with the observed competition between these pathways in vivo.