The introduction of exogenous DNA into the nuclear genome of Chlamydomonas reinhardtii occurs predominantly via non-homologous (illegitimate) recombination and results in integration at apparently-random loci. Using truncated and modified versions of the C. reinhardtii ARG7 gene in a series of transformation experiments, we demonstrate that homologous recombination between introduced DNA molecules occurs readily in C. reinhardtii, requires a region of homology of no more than 230 bp, and gives rise to intact copies of ARG7 in the nuclear genome. Evidence is presented for homologous recombination between introduced ARG7 DNA and the resident copy of the gene, and for the de-novo synthesis of the ARG7 sequence during transformation.