A plasmid recombination system has been developed that relies upon interplasmid exchanges for yeast cell viability. Two types of plasmids, one carrying the LEU2 allele inserted within yeast actin gene sequences and the other carrying 2-μm plasmid DNA and an intact actin gene, were constructed. Neither plasmid alone yielded transformants in the haploid Leu− strain AH22, but when cotransformed, a number of colonies were obtained. Southern blot analysis revealed that transformants arose because of recombination events within the homologous actin sequences that transferred the LEU2 gene to the actin gene on the 2-μm plasmid. The recombinant plasmids could be recovered, and sequence analysis of one recombination site revealed that the exchange event was faithful at the nucleotide level. The resulting recombinant plasmids carried a defective actin gene and presumably arose because of a double-crossover event. Deletion mutations that prevented actin gene expression on one donor plasmid enabled the recovery at a high frequency of transformants resulting primarily from single-crossover events between the two plasmids. This was presumably because such events no longer generated an intact actin gene on a multicopy plasmid. Infrequently a transformant from a plasmid with an intact gene was recovered, but in these cases the plasmid was not present in multiple copies. These cells exhibited a slower growth rate, and Northern blot analysis revealed an elevated level of actin mRNA.Key words: homologous recombination, regulation, gene disruption, tranformation, actin.