The induction of gene conversion and mitotic crossing-over by photoaddition of psoralens, 254 nm ultraviolet radiation, and nitrogen mustards was determined in diploid cells homozygous for the pso3-1 mutation and in the corresponding wild type of Saccharomyces cerevisiae. For these different agents, the frequency of non-reciprocal events (conversion) is reduced in the pso3-1 mutant compared to the wild type. In contrast, the frequency of reciprocal events (crossing-over) is increased at a range of doses. These observations, together with the block in induced mutagenesis for both reverse and forward mutations previously reported for the pso3-1 mutant, suggest that the PSO3 gene product plays a role in mismatch repair of short patch regions. The block in gene conversion in the pso3 homozygous diploid leads, in the case of nitrogen mustards, to specific repair intermediates which are lethal to the cells.