The mitochondrial intron-encoded endonuclease I-SceI of Saccharomyces cerevisiae has an 18-bp recognition sequence and, therefore, has a very low probability of cutting DNA, even within large genomes. We demonstrate that double-strand breaks can be initiated by the I-SceI endonuclease at a predetermined location in the mouse genome and that the breaks can be repaired with a donor molecule homologous with regions flanking the breaks. This induced homologous recombination is approximately 2 orders of magnitude more frequent than spontaneous homologous recombination and at least 10 times more frequent than random integration near an active promoter. As a consequence of induced homologous recombination, a heterologous novel sequence can be inserted at the site of the break. This recombination can occur at a variety of chromosomal targets in differentiated and multipotential cells. These results demonstrate homologous recombination involving chromosomal DNA by the double-strand break repair mechanism in mammals and show the usefulness of very rare cutter endonucleases, such as I-SceI, for designing genome rearrangements.