The integration of polyoma virus DNA into the genome of transformed rat cells generally takes place in a tandem head-to-tail arrangement. A functional viral large tumor antigen (T-Ag) renders this structure unstable, as manifested by free DNA production and excision or amplification of the integrated viral DNA. All of these phenomena involve the mobilization of precise genomic "units," suggesting that they result from intramolecular homologous recombination events occurring in the repeated viral DNA sequences within the integrated structures. We studied polyoma ts-a-transformed rat cell lines, which produced large T-Ag but contained less than a single copy of integrated viral DNA. In all of these lines, reversion to a normal phenotype (indicative of excision) was extremely low and independent of the presence of a functional large T-Ag. The revertants were either phenotypic or had undergone variable rearrangements of the integrated sequences that seemed to involve flanking host DNA. In two of these cell lines (ts-a 4A and ts-a 3B), we could not detect any evidence of amplification even after 2 months of propagation under conditions permissive for large T-Ag. An amplification event was detected in a small subpopulation of the ts-a R5-1 line after 2 months of growth at 33 degrees C. This involved a DNA fragment of 5.1 kilobases, consisting of the left portion of the viral insertion and about 2.5 kilobases of adjacent host DNA sequences. None of these lines spontaneously produced free viral DNA, but after fusion with 3T3 mouse fibroblasts, R5-1 and 4A produced a low level of heterogeneous free DNA molecules, which contained both viral and flanking host DNA. In contrast, the ts-a 9 cell line, whose viral insertion consists of a partial tandem of approximately 1.2 viral genomes, underwent a high rate of excision or amplification when propagated at temperatures permissive for large T-Ag function. These results indicate that the high rate of excision and amplification of integrated viral genomes observed in polyoma-transformed rat cells requires the presence of regions of homology (i.e., repeats) in the integrated viral sequences. Therefore, these events occur via homologous intramolecular recombination, which is promoted directly or indirectly by the large viral T-Ag.