The chromosomal DNA of the bacteria Streptomyces ambofaciens DSM40697 is an 8-Mb linear molecule that ends in terminal inverted repeats (TIRs) of 210 kb. The sequences of the TIRs are highly variable between the different linear replicons of Streptomyces (plasmids or chromosomes). Two spontaneous mutant strains harboring TIRs of 480 and 850 kb were isolated. The TIR polymorphism seen is a result of the deletion of one chromosomal end and its replacement by 480 or 850 kb of sequence identical to the end of the undeleted chromosomal arm. Analysis of the wild-type sequences involved in these rearrangements revealed that a recombination event took place between the two copies of a duplicated DNA sequence. Each copy was mapped to one chromosomal arm, outside of the TIR, and encoded a putative alternative sigma factor. The two ORFs, designated hasR and hasL, were found to be 99% similar at the nucleotide level. The sequence of the chimeric regions generated by the recombination showed that the chromosomal structure of the mutant strains resulted from homologous recombination events between the two copies. We suggest that this mechanism of chromosomal arm replacement contributes to the rapid evolutionary diversification of the sequences of the TIR in Streptomyces.