Rad54 is a dsDNA-dependent ATPase that translocates on duplex DNA. Its ATPase function is essential for homologous recombination, a pathway critical for meiotic chromosome segregation, repair of complex DNA damage, and recovery of stalled or broken replication forks. In recombination, Rad54 cooperates with Rad51 protein and is required to dissociate Rad51 from heteroduplex DNA to allow access by DNA polymerases for recombination-associated DNA synthesis. Sequence analysis revealed that Rad54 contains a perfect match to the consensus PIP box sequence, a widely spread PCNA interaction motif. Indeed, Rad54 interacts directly with PCNA, but this interaction is not mediated by the Rad54 PIP box-like sequence. This sequence is located as an extension of motif III of the Rad54 motor domain and is essential for full Rad54 ATPase activity. Mutations in this motif render Rad54 non-functional in vivo and severely compromise its activities in vitro. Further analysis demonstrated that such mutations affect dsDNA binding, consistent with the location of this sequence motif on the surface of the cleft formed by two RecA-like domains, which likely forms the dsDNA binding site of Rad54. Our study identified a novel sequence motif critical for Rad54 function and showed that even perfect matches to the PIP box consensus may not necessarily identify PCNA interaction sites.