Disruption of the gene encoding RAD51, the protein that catalyzes strand exchange during homologous recombination, leads to the accumulation of chromosome breaks and lethality in vertebrate cells. As RAD51 is implicated in BRCA1- and BRCA2-mediated tumor suppression as well as cellular viability, we have begun a functional analysis of a defined RAD51 mutation in mammalian cells. By using a dominant negative approach, we generated a mouse embryonic stem cell line that expresses an ATP hydrolysis-defective RAD51 protein, hRAD51-K133R, at comparable levels to the endogenous wild-type RAD51 protein, whose expression is retained in these cells. We found that these cells have increased sensitivity to the DNA-damaging agents mitomycin C and ionizing radiation and also exhibit a decreased rate of spontaneous sister-chromatid exchange. By using a reporter for the repair of a single chromosomal double-strand break, we also found that expression of the hRAD51-K133R protein specifically inhibits homology-directed double-strand break repair. Furthermore, expression of a BRC repeat from BRCA2, a peptide inhibitor of an early step necessary for strand exchange, exacerbates the inhibition of homology-directed repair in the hRAD51-K133R expressing cell line. Thus, ATP hydrolysis by RAD51 has a key role in various types of DNA repair in mammalian cells.