Sgs1 is a RecQ family DNA helicase required for genome stability in Saccharomyces cerevisiae whose human homologs BLM, WRN, and RECQL4 are mutated in Bloom's, Werner, and Rothmund Thomson syndromes, respectively. Sgs1 and mismatch repair (MMR) are inhibitors of recombination between similar but divergent (homeologous) DNA sequences. Here we show that SGS1, but not MMR, is critical for suppressing spontaneous, recurring translocations between diverged genes in cells with mutations in the genes encoding the checkpoint proteins Mec3, Rad24, Rad9, or Rfc5, the chromatin assembly factors Cac1 or Asf1, and the DNA helicase Rrm3. The S-phase checkpoint kinase and telomere maintenance factor Tel1, a homolog of the human ataxia telangiectasia (ATM) protein, prevents these translocations, whereas the checkpoint kinase Mec1, a homolog of the human ATM-related protein, and the Rad53 checkpoint kinase are not required. The translocation structures observed suggest involvement of a dicentric intermediate and break-induced replication with multiple cycles of DNA template switching.