Understanding the evolution of sex and recombination, key factors in the evolution of life, is a major challenge in biology. Studies of reproduction strategies of natural populations are important to complement the theoretical and experimental models. Fungi with both sexual and asexual life cycles are an interesting system for understanding the evolution of sex. In a study of natural populations of yeast Saccharomyces cerevisiae, we found that the isolates are heterothallic, meaning their mating type is stable, while the general belief is that natural S. cerevisiae strains are homothallic (can undergo mating-type switching). Mating-type switching is a gene-conversion process initiated by a site-specific endonuclease HO; this process can be followed by mother–daughter mating. Heterothallic yeast can mate with unrelated haploids (amphimixis), or undergo mating between spores from the same tetrad (intratetrad mating, or automixis), but cannot undergo mother–daughter mating as homothallic yeasts can. Sequence analysis of HO gene in a panel of natural S. cerevisiae isolates revealed multiple mutations. Good correspondence was found in the comparison of population structure characterized using 19 microsatellite markers spread over eight chromosomes and the HO sequence. Experiments that tested whether the mating-type switching pathway upstream and downstream of HO is functional, together with the detected HO mutations, strongly suggest that loss of function of HO is the cause of heterothallism. Furthermore, our results support the hypothesis that clonal reproduction and intratetrad mating may predominate in natural yeast populations, while mother–daughter mating might not be as significant as was considered.