The structural maintenance of chromosomes (Smc) family members Smc5 and Smc6 are both essential in budding and fission yeasts. Yeast smc5/6 mutants are hypersensitive to DNA damage, and Smc5/6 is recruited to HO-induced double-strand breaks (DSBs), facilitating intersister chromatid recombinational repair. To determine the role of the vertebrate Smc5/6 complex during the normal cell cycle, we generated an Smc5-deficient chicken DT40 cell line using gene targeting. Surprisingly, Smc5(-) cells were viable, although they proliferated more slowly than controls and showed mitotic abnormalities. Smc5-deficient cells were sensitive to methyl methanesulfonate and ionizing radiation (IR) and showed increased chromosome aberration levels upon irradiation. Formation and resolution of Rad51 and gamma-H2AX foci after irradiation were altered in Smc5 mutants, suggesting defects in homologous recombinational (HR) repair of DNA damage. Ku70(-/-) Smc5(-) cells were more sensitive to IR than either single mutant, with Rad54(-/-) Smc5(-) cells being no more sensitive than Rad54(-/-) cells, consistent with an HR function for the vertebrate Smc5/6 complex. Although gene targeting occurred at wild-type levels, recombinational repair of induced double-strand breaks was reduced in Smc5(-) cells. Smc5 loss increased sister chromatid exchanges and sister chromatid separation distances in mitotic chromosomes. We conclude that Smc5/6 regulates recombinational repair by ensuring appropriate sister chromatid cohesion.