We have examined the effect of sequence divergence on the efficiency of recombination in mismatch repair proficient and deficient cell lines by using an exon-switch based assay that involves introns as recombination substrates. Sequence divergence of 15% decreased spontaneous recombination by six-fold in mismatch repair proficient cells but only three- and two-fold in human cells with defects in mismatch repair genes MLH1 and MSH2, respectively. The decrease in recombination efficiency in mismatch repair proficient background does not seem to be due to the production of rearranged recombination intermediates since these were readily detectable in the assay system we used. In contrast, the efficiency of double-strand break-induced recombination was not affected by sequence divergence in mismatch repair proficient or deficient background. These results indicate that sequence divergence and mismatch repair block initiation of spontaneous recombination but not recombinational repair of double-strand breaks. The differential sensitivity of these two processes may be required for genome stability.