PI-SceI (VDE), a homing endonuclease with protein splicing activity, is a genomic parasite in the VMA1 gene of Saccharomyces cerevisiae. In a heterozygous diploid of the VDE-less VMA1 allele and a VDE-containing VMA1 allele, VDE specifically cleaves its recognition sequence (VRS) in the VDE-less VMA1 allele at meiosis, followed by ‘homing’, i.e. a conversion to a VDE-containing allele. We found that upon VDE expression, homing of a marker gene at an extragenic locus occurs only when a 45 bp element containing the VRS is inserted at its allelic site, while mutants of VDE with no endonuclease activity lack authentic extragenic homing activity. Thus, both the VRS and VDE are required for homing. Insertion of the VRS in a homozygous diploid significantly lowered the spore germination ability, indicating that a template for gene repair at its allelic locus is essential for efficient homing and survival of yeast cells. Copyright © 2002 John Wiley & Sons, Ltd.