Bacteriophages T2 and T4 are closely related T-even phages. However, T4 genetic markers predominate in the progeny of mixed infections, a phenomenon termed marker exclusion. One region previously mapped where the frequency of T2 markers in the progeny is extremely low is located around gene 32. Here, we describe SegG, a GIY-YIG family endonuclease adjacent to gene 32 of phage T4 that is absent from phage T2. In co-infections with T2 and T4, cleavage in T2 gene 32 by T4-encoded SegG initiates a gene conversion event that results in replacement of T2 gene 32 markers with the corresponding T4 sequence. Interestingly, segG inheritance is limited, apparently because of the physical separation of its cleavage and insertion sites, which are 332 base-pairs apart. This contrasts with efficient inheritance of the phage T4 td group I intron and its endonuclease, I-TevI, for which the distance separating the I-TevI cleavage site and td insertion site is 23 base-pairs. Furthermore, we show that co-conversion tracts generated by repair of SegG and I-TevI double-strand breaks contribute to the localized exclusion of T2 markers. Our results demonstrate that the endonuclease activities of SegG and I-TevI promote the spread of these two endonucleases to progeny phage, consistent with their role as selfish genetic elements, and also provide a mechanism by which the genetic contribution of T2 markers to progeny phage is reduced.