Break-induced replication (BIR) repairs one-ended double-strand breaks in DNA similar to those formed by replication collapse or telomere erosion, and it has been implicated in the initiation of genome instability in cancer and other human diseases1,2. Previous studies have defined the enzymes that are required for BIR1-5; however, understanding of initial and extended BIR synthesis, and of how the migrating D-loop proceeds through known replication roadblocks, has been precluded by technical limitations. Here we use a newly developed assay to show that BIR synthesis initiates soon after strand invasion and proceeds more slowly than S-phase replication. Without primase, leading strand synthesis is initiated efficiently, but is unable to proceed beyond 30 kilobases, suggesting that primase is needed for stabilization of the nascent leading strand. DNA synthesis can initiate in the absence of Pif1 or Pol32, but does not proceed efficiently. Interstitial telomeric DNA disrupts and terminates BIR progression, and BIR initiation is suppressed by transcription proportionally to the transcription level. Collisions between BIR and transcription lead to mutagenesis and chromosome rearrangements at levels that exceed instabilities induced by transcription during normal replication. Together, these results provide fundamental insights into the mechanism of BIR and how BIR contributes to genome instability.