Homologous recombination (HR) repairs DNA double-strand breaks and maintains genome stability. HR between linked, direct repeats can occur by gene conversion without an associated crossover that maintains the gross repeat structure. Alternatively, direct repeat HR can occur by gene conversion with a crossover, or by single-strand annealing (SSA), both of which delete one repeat and the sequences between the repeats. Prior studies of different repeat structures in yeast and mammalian cells revealed disparate conversion:deletion ratios. Here, we show that a key factor controlling this ratio is the distance between the repeats, with conversion frequency increasing linearly with the distances from 850 to 3800 bp. Deletions are thought to arise primarily by SSA, which involves extensive end-processing to reveal complementary single-strands in each repeat. The results can be explained by a model in which strand-invasion leading to gene conversion competes more effectively with SSA as more extensive end-processing is required for SSA. We hypothesized that a transcription unit between repeats would inhibit end-processing and SSA, thereby increasing the fraction of conversions. However, conversion frequencies were identical for direct repeats separated by 3800 bp of transcriptionally silent or active DNA, indicating that end-processing and SSA are not affected by transcription.