An in vitro system based on extracts of Escherichia coli infected with bacteriophage T7 was used to study genetic deletions between directly repeated sequences. The frequency of deletion was highest under conditions in which the DNA was actively replicating. Deletion frequency increased markedly with the length of the direct repeat both in vitro and in vivo. When a T7 gene was interrupted by 93 bp of nonsense sequence flanked by 20-bp direct repeats, the region between the repeats was deleted in about 1 out of every 1,600 genomes during each round of replication. Very similar values were found for deletion frequency in vivo and in vitro. The deletion frequency was essentially unaffected by a recA mutation in the host. When a double-strand break was placed between the repeats, repair of this strand break was often accompanied by the deletion of the DNA between the direct repeats, suggesting that break rejoining could contribute to deletion during in vitro DNA replication.