Transformation of both prokaryotes and eukaryotes with single-stranded oligonucleotides can transfer sequence information from the oligonucleotide to the chromosome. We have studied this process using oligonucleotides that correct a -1 frameshift mutation in the LYS2 gene of Saccharomyces cerevisiae. We demonstrate that transformation by oligonucleotides occurs preferentially on the lagging strand of replication and is strongly inhibited by the mismatch-repair system. These results are consistent with a mechanism in which oligonucleotides anneal to single-stranded regions of DNA at a replication fork and serve as primers for DNA synthesis. Because the mispairs the primers create are efficiently removed by the mismatch-repair system, single-stranded oligonucleotides can be used to probe mismatch-repair function in a chromosomal context. Removal of mispairs created by annealing of the single-stranded oligonucleotides to the chromosomal DNA is as expected, with 7-nt loops being recognized solely by MutS beta and 1-nt loops being recognized by both MutS alpha and MutS beta. We also find evidence for Mlh1-independent repair of 7-nt, but not 1-nt, loops. Unexpectedly, we find a strand asymmetry of mismatch-repair function; transformation is blocked more efficiently by MutS alpha on the lagging strand of replication, whereas MutS beta does not show a significant strand bias. These results suggest an inherent strand-related difference in how the yeast MutS alpha and MutS beta complexes access and/or repair mismatches that arise in the context of DNA replication.