Homologous recombination (HR) uses a homologous template to accurately repair DNA double-strand breaks and stalled replication forks to maintain genome stability. During homology search, Rad51 nucleoprotein filaments probe and interact with dsDNA, forming the synaptic complex that is stabilized on a homologous sequence. Strand intertwining leads to the formation of a displacement-loop (D-loop). In yeast, Rad54 is essential for HR in vivo and required for D-loop formation in vitro, but its exact role remains to be fully elucidated. Using electron microscopy to visualize the DNA-protein complexes, here we find that Rad54 is crucial for Rad51-mediated synaptic complex formation and homology search. The Rad54 −K341R ATPase-deficient mutant protein promotes formation of synaptic complexes but not D-loops and leads to the accumulation of stable heterologous associations, suggesting that the Rad54 ATPase is involved in preventing non-productive intermediates. We propose that Rad51/Rad54 form a functional unit operating in homology search, synaptic complex and D-loop formation.