The molecular products of DNA double strand break repair were investigated after transformation of yeast (Saccharomyces cerevisiae) with linearized plasmid DNA. DNA of an autonomous yeast plasmid cleaved to generate free ends lacking homology with the yeast genome, when used in transformation along with sonicated non-homologous carrier DNA, gave rise to transformants with high frequency. Most of these transformants were found to harbor a head-to-head (inverted) dimer of the linearized plasmid. This outcome of transformation contrasts with that observed when the carrier DNA is not present. Transformants occur at a much reduced frequency and harbor either the parent plasmid or a plasmid with deletion at the site of the cleavage. When the linearized plasmid is introduced along with sonicated carrier DNA and a homologous DNA restriction fragment that spans the site of plasmid cleavage, homologous recombination restores the plasmid to its original circular form. Inverted dimer plasmids are not detected. This relationship between homologous recombination and a novel DNA transaction that yields rearrangement could be important to the cell, as the latter could lead to a loss of gene function and lethality.