Homologous recombination is an evolutionally conserved mechanism that promotes genome stability through the faithful repair of double-strand breaks and single-strand gaps in DNA, and the recovery of stalled or collapsed replication forks. Saccharomyces cerevisiae ATP-dependent DNA helicase Srs2 (a member of the highly conserved UvrD family of helicases) has multiple roles in regulating homologous recombination. A mutation (srs2K41A) resulting in a helicase-dead mutant of Srs2 was found to be lethal in diploid, but not in haploid, cells. In diploid cells, Srs2K41A caused the accumulation of inter-homolog joint molecule intermediates, increased the levels of spontaneous Rad52 foci, and induced gross chromosomal rearrangements. Srs2K41A lethality and accumulation of joint molecules were suppressed by inactivating Rad51 or deleting the Rad51-interaction domain of Srs2, whereas phosphorylation and sumoylation of Srs2 and its interaction with sumoylated proliferating cell nuclear antigen (PCNA) were not required for lethality. The structure-specific complex of crossover junction endonucleases Mus81 and Mms4 was also required for viability of diploid, but not haploid, SRS2 deletion mutants (srs2Δ), and diploid srs2Δ mus81Δ mutants accumulated joint molecule intermediates. Our data suggest that Srs2 and Mus81–Mms4 have critical roles in preventing the formation of (or in resolving) toxic inter-homolog joint molecules, which could otherwise interfere with chromosome segregation and lead to genetic instability.