Many interspecies hybrids have been discovered in yeasts, but most of these hybrids are asexual and can replicate only mitotically. Whole-genome duplication has been proposed as a mechanism by which interspecies hybrids can regain fertility, restoring their ability to perform meiosis and sporulate. Here, we show that this process occurred naturally during the evolution of Zygosaccharomyces parabailii, an interspecies hybrid that was formed by mating between 2 parents that differed by 7% in genome sequence and by many interchromosomal rearrangements. Surprisingly, Z. parabailii has a full sexual cycle and is genetically haploid. It goes through mating-type switching and autodiploidization, followed by immediate sporulation. We identified the key evolutionary event that enabled Z. parabailii to regain fertility, which was breakage of 1 of the 2 homeologous copies of the mating-type (MAT) locus in the hybrid, resulting in a chromosomal rearrangement and irreparable damage to 1 MAT locus. This rearrangement was caused by HO endonuclease, which normally functions in mating-type switching. With 1 copy of MAT inactivated, the interspecies hybrid now behaves as a haploid. Our results provide the first demonstration that MAT locus damage is a naturally occurring evolutionary mechanism for whole-genome duplication and restoration of fertility to interspecies hybrids. The events that occurred in Z. parabailii strongly resemble those postulated to have caused ancient whole-genome duplication in an ancestor of Saccharomyces cerevisiae.