Double-strand break (DSB) repair through homologous recombination (HR) is an evolutionarily conserved process that is generally error-free. The risk to genome stability posed by nonallelic recombination or loss-of-heterozygosity could be reduced by confining HR to sister chromatids, thereby preventing recombination between homologous chromosomes. Here we show that the sister chromatid cohesion complex (cohesin) is a limiting factor in the control of DSB repair and genome stability and that it suppresses DNA damage–induced interactions between homologues. We developed a gene dosage system in tetraploid yeast to address limitations on various essential components in DSB repair and HR. Unlike RAD50 and RAD51, which play a direct role in HR, a 4-fold reduction in the number of essential MCD1 sister chromatid cohesion subunit genes affected survival of gamma-irradiated G2/M cells. The decreased survival reflected a reduction in DSB repair. Importantly, HR between homologous chromosomes was strongly increased by ionizing radiation in G2/M cells with a single copy of MCD1 or SMC3 even at radiation doses where survival was high and DSB repair was efficient. The increased recombination also extended to nonlethal doses of UV, which did not induce DSBs. The DNA damage–induced recombinants in G2/M cells included crossovers. Thus, the cohesin complex has a dual role in protecting chromosome integrity: it promotes DSB repair and recombination between sister chromatids, and it suppresses damage-induced recombination between homologues. The effects of limited amounts of Mcd1and Smc3 indicate that small changes in cohesin levels may increase the risk of genome instability, which may lead to genetic diseases and cancer.