During homologous recombination, Rad51 forms a nucleoprotein filament on single-stranded DNA to promote DNA strand exchange. This filament binds to double-stranded DNA (dsDNA), searches for homology, and promotes transfer of the complementary strand, producing a new heteroduplex. Strand exchange proceeds via two distinct three-strand intermediates, C1 and C2. C1 contains the intact donor dsDNA whereas C2 contains newly formed heteroduplex DNA. Here, we show that the conserved DNA binding motifs, loop 1 (L1) and loop 2 (L2) in site I of Rad51, play distinct roles in this process. L1 is involved in formation of the C1 complex whereas L2 mediates the C1–C2 transition, producing the heteroduplex. Another DNA binding motif, site II, serves as the DNA entry position for initial Rad51 filament formation, as well as for donor dsDNA incorporation. Our study provides a comprehensive molecular model for the catalytic process of strand exchange mediated by eukaryotic RecA-family recombinases.