Cloning in Escherichia coli and Bacillus subtilis was carried out using the bifunctional plasmid pDH5060. B. subtilis chromosomal DNA and pDH5060 DNA were digested with either BamHI or SalI, then annealed, ligated, and transformed into E. coli SK2267. Transformants containing sequences ligated into the BamHI or SalI sites in the Tcr gene of pDH5060 were selected directly using a modification of the fusaric acid technique. The BamHI and SalI clone banks contain about 250 and 140 B. subtilis fragments, respectively, with an average insert size of 8-9 Kbp in the BamHI and 4-5 Kbp in the SalI bank. The inserts ranged in size from 0.3 Kbp to greater than 20 Kbp. The vector used here therefore accepts inserts which are significantly larger than previously reported for other B. subtilis cloning systems. All individual cloned B. subtilis sequences examined were stably propagated in E. coli SK2267. Eight of eighteen B. subtilis auxotrophic markers tested (aroG, gltA, glyB, ilvA, metC, purA, pyrD, and thrA) were transformed to prototrophy with BamHI or SalI clone bank DNA. All or part of the hybrid plasmid DNA recombined at the sites of homology in the chromosome of these Rec+ recipients. Loss of sequences from hybrid plasmids was not prevented in a r- m- recE4 recipient strain of B. subtilis. Although the recE4 background prevented recombination between homologous chromosomal DNA, a variety of cloned fragments were shown to be unstable and undergo deletions of both insert and plasmid sequences. In addition, B. subtilis sequences propagated in E. coli transformed B. subtilis recE4 recipients with a 500-1,000-fold reduced efficiency.