Displacement loops (D-loops) are intermediates formed during homologous recombination that play a pivotal role in the fidelity of repair. Rdh54 (a.k.a. Tid1), a Rad54 paralog in Saccharomyces cerevisiae, is well-known for its role with Dmc1 recombinase during meiotic recombination. Yet contrary to Dmc1, Rdh54 is also present in somatic cells where its function is less understood.While Rdh54 enhances the Rad51 DNA strand invasion activity in vitro, it is unclear how it interplays with Rad54-mediated invasions. Here, we show that Rdh54 inhibits D-loop formation by Rad51 and Rad54 in an ATPase-independent manner. Using a novel D-loop Mapping Assay, we further demonstrate that Rdh54 uniquely restricts the lengths of Rad54-mediated D-loops. The alterations in D-loop properties appear to be important for cell survival and mating-type switch in haploid yeast, whereas Rdh54 expression is suppressed in diploids. We propose that Rdh54 and Rad54 compete for potential binding sites within the Rad51 filament, where Rdh54 acts as a physical roadblock to Rad54's translocation activity, limiting D-loop formation and D-loop length.