We studied the process by which whd, a P-element insertion allele of the Drosophila melanogaster white locus, is replaced by its homolog in the presence of transposase. These events are interpreted as the result of double-strand gap repair following excision of the P transposon in whd. We used a series of alleles derived from whd through P-element mobility as templates for this repair. One group of alleles, referred to collectively as whd-F, carried fragments of the P element that had lost some of the sequences needed in cis for mobility. The other group, whd-D, had lost all of the P insert and had some of the flanking DNA from white deleted. The average replacement frequencies were 43% for whd-F alleles and 7% for the whd-D alleles. Some of the former were converted at frequencies exceeding 50%. Our data suggest that the high conversion frequencies for the whd-F templates can be attributed at least in part to an elevated efficiency of repair of unexpanded gaps that is possibly caused by the closer match between whd-F sequences and the unexpanded gap endpoints. In addition, we found that the gene substitutions were almost exclusively in the direction of whd being replaced by the whd-F or whd-D allele rather than the reverse. The template alleles were usually unaltered in the process. This asymmetry implies that the conversion process is unidirectional and that the P fragments are not good substrates for P-element transposase. Our results help elucidate a highly efficient double-strand gap repair mechanism in D. melanogaster that can also be used for gene replacement procedures involving insertions and deletions. They also help explain the rapid spread of P elements in populations.