Bloom's syndrome (BS) is a rare genetic disorder and the cells from BS patients show genomic instability and an increased level of sister chromatid exchange (SCE). We generated BLM(-/-) and BLM(-/-)/RAD54(-/-) DT40 cells from the chicken B-lymphocyte line DT40. The BLM(-/-) DT40 cells showed higher sensitivity to methyl methanesulfonate and elevated levels of SCE as expected. The targeted integration frequency was also increased remarkably in BLM(-/-) cells. The SCE frequency increase in BLM(-/-) cells was considerably reduced and the enhanced targeted integration observed in BLM(-/-) cells was almost completely abolished in BLM(-/-)/RAD54(-/-) cells, indicating that a large portion of the SCE in BLM(-/-) cells occurs via homologous recombination, and homologous recombination events increase with the defect of BLM function. The BLM(-/-)/RAD54(-/-) cells showed a slow growth phenotype and an increased incidence of chromosome-type breaks/gaps while each single mutant showed relatively small numbers of chromosome-type breaks/gaps.