We describe gene targeting experiments involving a human cell line (RAN10) containing, in addition to its endogenous alleles, two ectopic alleles of the interferon-inducible gene 6-16. The frequency of gene targeting at one of the ectopic 6-16 alleles (H3.7) was 34-fold greater than the combined frequency of gene targeting involving endogenous 6-16 alleles in RAN10. Preference for H3.7 was maintained when the target loci in RAN10 were transcriptionally activated by interferon. Despite the 34-fold preference for H3.7, the absolute gene targeting efficiency in RAN10 was only 3-fold higher than in the parental HT1080 cell line. These data suggest that different alleles can compete with each other, and perhaps with non-homologous loci, in a step which is necessary, but not normally rate-limiting, for gene targeting. The efficiency of this step can therefore be more sensitive to chromosomal position effects than the rate-determining steps for gene targeting. The nature of the position effects involved remains unknown but does not correlate with transcription status, which in our system has a very modest influence on the frequency of gene targeting. In summary, our work unequivocally identifies a position effect on gene targeting in human cells.