Saccharomyces cerevisiae DNA polymerase IV (Pol4) like its homolog, human DNA polymerase lambda (Polλ), is involved in Non-Homologous End-Joining and Microhomology-Mediated Repair. Using genetic analysis, we identified an additional role of Pol4 also in homology-directed DNA repair, specifically in Rad52-dependent/Rad51-independent direct-repeat recombination. Our results reveal that the requirement for Pol4 in repeat recombination was suppressed by the absence of Rad51, suggesting that Pol4 counteracts the Rad51 inhibition of Rad52-mediated repeat recombination events. Using purified proteins and model substrates, we reconstituted in vitro reactions emulating DNA synthesis during direct-repeat recombination and show that Rad51 directly inhibits Polδ DNA synthesis. Interestingly, although Pol4 was not capable of performing extensive DNA synthesis by itself, it aided Polδ in overcoming the DNA synthesis inhibition by Rad51. In addition, Pol4 dependency and stimulation of Polδ DNA synthesis in the presence of Rad51 occurred in reactions containing Rad52 and RPA where DNA strand-annealing was necessary. Mechanistically, yeast Pol4 displaces Rad51 from ssDNA independent of DNA synthesis. Together our in vitro and in vivo data suggest that Rad51 suppresses Rad52-dependent/Rad51-independent direct-repeat recombination by binding to the primer-template and that Rad51 removal by Pol4 is critical for strand-annealing dependent DNA synthesis.