In Yarrowia lipolytica, targeted gene replacement occurs only with long length (1 kb) homologous flanking fragments, as this yeast preferentially uses the non-homologous end-joining mechanism (NHEJ) for DNA repair over homologous recombination (HR). To improve the frequency of HR, we identified and disrupted the KU70 and KU80 genes responsible for double strand break repair in the NHEJ pathway in Y. lipolytica. In ku70a dagger HR of URA3 marker at the ADE2 locus occurred with 43 % frequency with as little as 50 bp long flanking regions. The number of Ura(+) transformants was reduced to 1 % of the Po1d (ura3-302) wild type-like strain level, regardless of the flanking fragment length. On the contrary, even though HR was not improved in ku80a dagger, Ura(+) transformants was 60 % lower compared to the wild type.