The genomic instability of persons with Bloom's syndrome (BS) features particularly an increased number of sister-chromatid exchanges (SCEs). The primary cause of the genomic instability is mutation at BLM, which encodes a DNA helicase of the RecQ family. BLM interacts with Topoisomerase IIIalpha (Topo IIIalpha), and both BLM and Topo IIIalpha localize to the nuclear organelles referred to as the promyelocytic leukemia protein (PML) nuclear bodies. In this study we show, by analysis of cells that express various deletion constructs of green fluorescent protein (GFP)-tagged BLM, that the first 133 amino acids of BLM are necessary and sufficient for interaction between Topo IIIalpha and BLM. The Topo IIIalpha-interaction domain of BLM is not required for BLM's localization to the PML nuclear bodies; in contrast, Topo IIIalpha is recruited to the PML nuclear bodies via its interaction with BLM. Expression of a full-length BLM (amino acids 1-1417) in BS cells can correct their high SCEs to normal levels, whereas expression of a BLM fragment that lacks the Topo IIIalpha interaction domain (amino acids 133-1417) results in intermediate SCE levels. The deficiency of amino acids 133-1417 in the reduction of SCEs was not explained by a defect in DNA helicase activity, because immunoprecipitated 133-1417 protein had 4-fold higher activity than GFP-BLM. The data implicate the BLM-Topo IIIalpha complex in the regulation of recombination in somatic cells.