Saccharomyces cerevisiae DNA ligase IV (LIG4) has been shown previously to be involved in non-homologous DNA end joining and meiosis. The homologous mammalian DNA ligase IV interacts with XRCC4, a protein implicated in V(D)J recombination and double-strand break repair. Here, we report the discovery of LIF1, a S.cerevisiae protein that strongly interacts with the C-terminal BRCT domain of yeast LIG4. LIG4 and LIF1 apparently occur as a heterodimer in vivo. LIF1 shares limited sequence homology with mammalian XRCC4. Disruption of the LIF1 gene abolishes the capacity of cells to recircularize transformed linearized plasmids correctly by non-homologous DNA end joining. Loss of LIF1 is also associated with conditional hypersensitivity of cells to ionizing irradiation and with reduced sporulation efficiency. Thus, with respect to their phenotype, lif1 strains are similar to the previously described lig4 mutants. One function of LIF1 is the stabilization of the LIG4 enzyme. The finding of a XRCC4 homologue in S.cerevisiae now allows for mutational analyses of structure-function relationships in XRCC4-like proteins to define their role in DNA double-strand break repair.