The MSH1 and MSH2 genes of Saccharomyces cerevisiae are predicted to encode proteins that are homologous to the Escherichia coli MutS and Streptococcus pneumoniae HexA proteins and their homologs. Disruption of the MSH1 gene caused a petite phenotype which was established rapidly. A functional MSH1 gene present on a single-copy centromere plasmid was incapable of rescuing the established msh1 petite phenotype. Analysis of msh1 strains demonstrated that mutagenesis and large-scale rearrangement of mitochondrial DNA had occurred. 4',6-Diamidino-2-phenylindole (DAPI) staining of msh1 yeast revealed an aberrant distribution of mtDNA. Haploid msh2 mutants displayed an increase of 85-fold in the rate of spontaneous mutation to canavanine resistance. Sporulation of homozygous msh2/msh2 diploids gave rise to a high level of lethality which was compounded during increased vegetative growth prior to sporulation. msh2 mutations also affected gene conversion of two HIS4 alleles. The his4x mutation, lying near the 5' end of the gene, was converted with equal frequency in both wild-type and msh2 strains. However, many of the events in the msh2 background were post-meiotic segregation (PMS) events (46.4%) while none (< 0.25%) of the aberrant segregations in wild type were PMS events. The his4b allele, lying 1.6 kb downstream of his4x, was converted at a 10-fold higher frequency in the msh2 background than in the corresponding wild-type strain. Like the his4x allele, his4b showed a high level of PMS (30%) in the msh2 background compared to the corresponding wild-type strain where no (< 0.26%) PMS events were observed. These results indicate that MSH1 plays a role in repair or stability of mtDNA and MSH2 plays a role in repair of 4-bp insertion/deletion mispairs in the nucleus.