Ku70 and Ku86 together with DNA-PKcs form the DNA-dependent protein kinase (DNA-PK) complex that is involved in DNA double-strand break repair by nonhomologous end joining. We investigated the effect of Ku86 mutation on intrachromosomal homologous recombination (HR) resulting in deletions in vivo in mice. We quantified such deletion events using a phenotypic pigmentation assay. Deletion of one copy of a 70 kb DNA duplication in the pink-eyed unstable (pun) allele results in reversion to the wildtype pink-eyed dilution (p) gene, allowing black pigment accumulation in cells of the retinal pigment epithelium (RPE). We found that the frequency of homologous recombination was significantly reduced in Ku86 deficient mice. Furthermore, the proliferation of cells in which recombination events occurred was reduced and developmentally delayed in the Ku86 deficient mice. These data indicate a role for Ku86 directly or indirectly in homologous recombination in vivo.