MSH2 and MSH6 proteins exist as a stable complex, as do the MLH1 and PMS1 proteins. To study the mismatch binding properties of the MSH2-MSH6 complex and to examine its functional interaction with the MLH1-PMS1 complex, these protein complexes were purified to near homogeneity from overproducing yeast strains. As has been reported previously, the purified MSH2-MSH6 complex binds DNA substrates containing a G/T mismatch and insertion/deletion mismatches, but the binding affinity for the latter decreases as the size of the extrahelical loop increases. Addition of ATP or the nonhydrolyzable ATPgammaS reduces binding of the MSH2-MSH6 complex to the DNA substrates markedly. Here, we show that MSH2-MSH6 forms a ternary complex with MLH1-PMS1 on a mismatch containing DNA substrate. The formation of this ternary complex requires ATP, which can be substituted by ATPgammaS, suggesting that ATP binding alone is sufficient for ternary complex formation. Thus, it appears that ATP binding by the MSH2-MSH6 complex induces a conformation that is conducive for the interaction with MLH1-PMS1 complex, leading to the formation of the ternary complex.