Stem rust resistance gene Sr43, an effective gene against the Ug99 race group of Puccinia graminis f. sp. tritici (Pgt), was originally transferred into wheat cultivar ‘Thatcher’ from tall wheat grass (Thinopyrum ponticum). In a previous study, we developed two introgression lines named RWG33 and RWG34 carrying Sr43 on a shortened Th. ponticum segment in the T7DS•7DL-7el2L-7DL translocated chromosome. Although the Th. ponticum segments in these two lines were shortened by approximately 80% compared to the original stock, they still carry the yellow grain pigment gene PSY-E1, which results in high yellow pigment content and yellow flour, an undesirable characteristic in bread wheat. To break the tight linkage between the two genes, the introgression line RWG34 was backcrossed with the Chinese Spring (CS) ph1b mutant. The resistant BC1F1 plants with ph1bph1b were selected to be crossed with CS. From 1,880 BC2F1 plants and their progenies evaluated for reaction to Pgt race TMLKC and genotyped using the SSR markers located on the Th. ponticum segment in RWG34, we identified three plants in which the yellow pigment gene PSY-E1 was successfully eliminated. Quality analysis showed that the three wheat introgression lines derived from these plants without PSY-E1 had the same or similar yellow pigment concentration and flour color as CS and Thatcher. This study highlights the successful isolation of recombinants between the two tightly-linked genes for the first time. To facilitate the utilization of Sr43 in wheat breeding program, we developed new DNA markers that are diagnostic to the shortened Th. ponticum segment carrying Sr43. The new wheat introgression lines carrying Sr43 and its linked molecular markers developed in this study are a valuable addition to the resources for control of Ug99 and other emerging races of stem rust pathogen.