DNA damage such as double-strand breaks presents severe difficulties for the cell to repair, especially if genetic stability is to be preserved. Recombination of the damaged DNA molecule with an undamaged homologous sequence provides a potential mechanism for the high-fidelity repair of such damage, and genes encoding homologous recombination (HR) proteins have been identified in mammalian cells. Xrcc2 is a protein with homology to Rad51, the core component of HR, but with a nonredundant role in damage repair. Here, we make the first study of the consequences of knocking out one or both copies of the Xrcc2 gene in mouse cells. In addition to growth arrest and sensitivity to agents causing severe DNA damage, we show that order-of-magnitude higher levels of chromosomal alterations are sustained in primary or immortal Xrcc2(-/-) embryonic fibroblasts. Using spectral karyotyping, we find that aneuploidy and complex chromosome exchanges, including an unexpectedly high frequency of homologue exchanges, are hallmarks of Xrcc2 deficiency. In addition, we find evidence for mild haploinsufficiency of Xrcc2. These responses are linked to several indicators of reduced HR in Xrcc2(-/-) cells, including a 30-fold reduction in gene conversion and reduced levels of Rad51-focus formation and of sister-chromatid exchange. Our data have similarities to recent studies of the disruption of breast cancer-predisposing (Brca) genes in mouse cells and are contrasted to analyses of cells carrying disruptions of genes in the other main pathway for double-strand break repair, nonhomologous end joining.