We report here that a normal budding yeast chromosome (ChrVII) can undergo remarkable cycles of chromosome instability. The events associated with cycles of instability caused a distinctive “sectoring” of colonies on selective agar plates. We found that instability initiated at any of several sites on ChrVII, and was sharply increased by the disruption of DNA replication or by defects in checkpoint controls. We studied in detail the cycles of instability associated with one particular chromosomal site (the “403 site”). This site contained multiple tRNA genes known to stall replication forks, and when deleted, the overall frequency of sectoring was reduced. Instability of the 403 site involved multiple nonallelic recombination events that led to the formation of a monocentric translocation. This translocation remained unstable, frequently undergoing either loss or recombination events linked to the translocation junction. These results suggest a model in which instability initiates at specific chromosomal sites that stall replication forks. Forks not stabilized by checkpoint proteins break and undergo multiple rounds of nonallelic recombination to form translocations. Some translocations remain unstable because they join two “incompatible” chromosomal regions. Cycles of instability of this normal yeast chromosome may be relevant to chromosome instability of mammalian fragile sites and of chromosomes in cancer cells.