We have constructed plasmids carrying direct internal repeats 260-2000 bp long. Monomers of such plasmids transformed Bacillus subtilis competent cells. The efficiency of transformation varied with the square of the length of repeats. The transformed clones harbored either the entire transforming plasmid and the plasmid arising by recombination between the repeats, or only the latter plasmid. Internally-repeated plasmids linearized by in vitro cleavage with restriction endonuclease could transform, yielding clones which exclusively harbored a plasmid resulting from recombination between the repeats. When the transforming plasmid carried repeats which differed slightly, conversion of one repeat into the other could occur. The following model of plasmid transformation accounts for these data: (1) plasmid DNA is cleaved and rendered linear in contact with competent cells; (2) a linear, at least partially double-stranded plasmid molecule is introduced or formed by repair within the cell; (3) a circular viable plasmid is produced by recombination between repeats carried on this molecule; (4) alternatively, a viable plasmid is produced by repairing the cut within one of the repeats by DNA synthesis which uses the other repeat as a template.