We have constructed lines of mice with transgenes containing an antibody heavy (H) chain variable region (VHDJH) gene and various amounts of natural immunoglobulin (Ig) and plasmid flanking DNA. In these lines, recombination of the transgene and the endogenous Igh locus takes place in B cells, leading to the expression of functional H chains partially encoded by the transgenic VHDJH gene. Here, we demonstrate that the transgenic VHDJH gene, and various amounts of flanking sequence are recombined with Igh locus DNA via interchromosomal gene conversion. The structures of the resulting "hybrid" transgene-Igh H chain loci are consistent with the 3' end of the conversion occurring in regions of sequence identity, and the 5' end taking place between regions of little or no homology. This mode of antibody transgene recombination with the Igh locus is fundamentally different from the previously reported "trans H chain class switching" that results in reciprocal translocations. In contrast, this recombination resembles events previously observed in mammalian tissue culture cells between adjacent homologous chromosomal sequences, or transfected DNA and a homologous chromosomal target. Our data indicate that this recombination takes place at a low frequency, and that the frequency is influenced by both the length and extent of homology between the transgene and the Igh locus, but is not greatly affected by transgene copy number. This recombination pathway provides a novel approach for the subtle alteration of the clonal composition of the mouse B cell compartment in vivo using VH genes with defined structures and functions.