Homologous recombination is a versatile DNA damage repair pathway requiring Rad51 and Rad54. Here we show that a mammalian Rad54 paralog, Rad54B, displays physical and functional interactions with Rad51 and DNA that are similar to those of Rad54. While ablation of Rad54 in mouse embryonic stem (ES) cells leads to a mild reduction in homologous recombination efficiency, the absence of Rad54B has little effect. However, the absence of both Rad54 and Rad54B dramatically reduces homologous recombination efficiency. Furthermore, we show that Rad54B protects ES cells from ionizing radiation and the interstrand DNA cross-linking agent mitomycin C. Interestingly, at the ES cell level the paralogs do not display an additive or synergic interaction with respect to mitomycin C sensitivity, yet animals lacking both Rad54 and Rad54B are dramatically sensitized to mitomycin C compared to either single mutant. This suggests that the paralogs possibly function in a tissue-specific manner. Finally, we show that Rad54, but not Rad54B, is needed for a normal distribution of Rad51 on meiotic chromosomes. Thus, even though the paralogs have similar biochemical properties, genetic analysis in mice uncovered their nonoverlapping roles.