To develop a method to modify genomic sequences in Ascobolus immersus by precisely reintroducing defined DNA segments previously manipulated in vitro, we investigated the effect of transforming DNA conformation on recombination with chromosomal sequences. Circular single-stranded DNA carrying the met2 gene and double-stranded DNA linearized by cutting within the met2 gene both transformed protoplasts of a met2 mutant strain of A. immersus to prototrophy. In contrast to the equivalent circular double-stranded DNA, which chiefly integrated at nonhomologous chromosomal sites, single-stranded and double-stranded cut DNAs recombined primarily with the homologous chromosomal met2 sequence. Of the single-stranded DNA transformants, 65% resulted from replacement of the resident met2 mutation by the exogenous wild-type allele. In 70% of the double-stranded-cut DNA transformants, one or more copies of the transforming DNA had integrated at the met2 locus, leading to tandem duplications of the met2 target region separated by plasmid DNA. These duplicated sequences could recombine, leading to progeny containing only one copy of the met2 region. This resulted in a precise gene replacement if the wild-type allele had been retained. In addition, we show that newly duplicated sequences were most often de novo methylated at the cytosine residues during the sexual phase. Cytosine methylation was associated with inactivation of the integrated met2 gene(s) in segregants of crosses. However, methylation was not accurately maintained at each DNA replication cycle, so that Met- segregants recovered a wild-type phenotype through successive mitotic divisions. This finding indicated that met2 genes were silenced by methylation alone.