The complete synthetic Mycoplasma genitalium genome ( approximately 583 kb) has been assembled and cloned as a circular plasmid in the yeast Saccharomyces cerevisiae. Attempts to engineer the cloned genome by standard genetic methods involving the URA3/5-fluoroorotic acid (5-FOA) counter-selection have shown a high background of 5-FOA resistant clones derived from spontaneous deletions of the bacterial genome maintained in yeast. Here, we report a method that can seamlessly modify the bacterial genome in yeast with high efficiency. This method requires two sequential homologous recombination events. First, the target region is replaced with a mutagenesis cassette that consists of a knock-out CORE (an18-bp I-SceI recognition site, the SCEI gene under the control of the GAL1 promoter, and the URA3 marker) and a DNA fragment homologous to the sequence upstream of the target site. The replacement generates tandem repeat sequences flanking the CORE. Second, galactose induces the expression of I-SceI, which generates a double-strand break (DSB) at the recognition site. This DSB promotes intra-molecular homologous recombination between the repeat sequences, and leads to an excision of the CORE. As a result, a seamless modification is generated. This method can be adapted for a variety of genomic modifications and may provide an important tool to modify and design natural or synthetic genomes propagated in yeast.