The Saccharomyces cerevisiae mismatch repair (MMR) protein MSH6 and the SGS1 helicase were recently shown to play similarly important roles in preventing recombination between divergent DNA sequences in a single-strand annealing (SSA) assay. In contrast, MMR factors such as Mlh1p, Pms1p, and Exo1p were shown to not be required or to play only minimal roles. In this study we tested mutations that disrupt Sgs1p helicase activity, Msh2p-Msh6p mismatch recognition, and ATP binding and hydrolysis activities for their effect on preventing recombination between divergent DNA sequences (heteroduplex rejection) during SSA. The results support a model in which the Msh proteins act with Sgs1p to unwind DNA recombination intermediates containing mismatches. Importantly, msh2 mutants that displayed separation-of-function phenotypes with respect to nonhomologous tail removal during SSA and heteroduplex rejection were characterized. These studies suggest that nonhomologous tail removal is a separate function of Msh proteins that is likely to involve a distinct DNA binding activity. The involvement of Sgs1p in heteroduplex rejection but not nonhomologous tail removal further illustrates that subsets of MMR proteins collaborate with factors in different DNA repair pathways to maintain genome stability.