DNA-damage tolerance (DDT) is an important mechanism for living cells to bypass replication blocks on the template strand. In Saccharomyces cerevisiae, DDT is mediated by the RAD6 epistasis group of genes, consisting of two parallel pathways: error-prone translesion DNA synthesis (TLS), and error-free lesion bypass. The two pathways are activated by sequential ubiquitination of PCNA on the Lys164 residue. When a replication fork is stalled at a lesion, PCNA is first monoubiquitinated by Rad6-Rad18, which leads to the TLS pathway. The subsequent ubiquitination by the Mms2-Ubc13-Rad5 complex on the monoubiquitinated PCNA is to form a Lys63-linked polyubiquitin chain that promotes error-free lesion bypass. While the TLS pathway has been extensively characterized, the molecular events leading to error-free lesion bypass by polyubiquitinated PCNA are largely obscure. Furthermore, PCNA can also be sumoylated at the same Lys164 residue, which helps to recruit Srs2, a helicase and anti-recombinase. This review summarizes recent advances in our understanding of error-free DDT and its interplay with Srs2 and homologous recombination.