DNA-damage tolerance (DDT) is defined as a mechanism by which eukaryotic cells resume DNA synthesis to fill the single-stranded DNA gaps left by replication-blocking lesions. Eukaryotic cells employ two different means of DDT, namely translesion DNA synthesis (TLS) and template switching, both of which are coordinately regulated through sequential ubiquitination of PCNA at the K164 residue. In the budding yeast Saccharomyces cerevisiae, the same PCNA-K164 residue can also be sumoylated, which recruits the Srs2 helicase to prevent undesired homologous recombination (HR). While the mediation of TLS by PCNA monoubiquitination has been extensively characterized, the method by which K63-linked PCNA polyubiquitination leads to template switching remains unclear. We recently identified a yeast heterotetrameric Shu complex that couples error-free DDT to HR as a critical step of template switching. Here we report that the Csm2 subunit of Shu physically interacts with Rad55, an accessory protein involved in HR. Rad55 and Rad57 are Rad51 paralogues and form a heterodimer to promote Rad51-ssDNA filament formation by antagonizing Srs2 activity. Although Rad55-Rad57 and Shu function in the same pathway and both act to inhibit Srs2 activity, Shu appears to be dedicated to error-free DDT while the Rad55-Rad57 complex is also involved in double-strand break repair. This study reveals the detailed steps of error-free lesion bypass and also brings to light an intrinsic interplay between error-free DDT and Srs2-mediated inhibition of HR.