We found that transducing phages carrying the gal or bio regions of the Escherichia coli genome were formed during in vitro packaging of endogenous lambda DNA. Structural analysis of the transducing phage genomes indicated that they were formed by abnormal excision of lambda prophage. Formation of transducing phages was stimulated by oxolinic acid, an inhibitor of DNA gyrase, implying that DNA gyrase participates in the abnormal excision of lambda prophage. When pBR322 DNA was added to the reaction mixture, transducing phages into which pBR322 had been inserted were produced at a high frequency. This reaction was also stimulated by oxolinic acid. Sequence analyses revealed that pBR322 is inserted into the sites of abnormal excision of the prophage. These results show that transducing phages can be formed by DNA gyrase-dependent illegitimate recombination in an in vitro system and that secondary recombination takes place frequently at the site where the first recombination occurs.