We used the recombination-promoting activity of the polyomavirus large T antigen (T-ag) to increase the frequency of gene targeting in rat fibroblasts. We constructed a cell line carrying a functional polyomavirus replication origin and a transformation-defective middle T-ag oncogene. The structure of the locus was such that homologous recombination with the targeting DNA reconstituted a functional transforming gene and converted the cells from the normal to the transformed state. Introduction of the large T-ag with the targeting DNA promoted recombinational events that corrected the mutation in either the target locus or the targeting DNA. The frequency of recombination was not substantially influenced by the extent of homology between the recombining sequences. However, it was reduced when the replication origin was inactivated in the targeting DNA, and was reduced further when the origin was inactivated in the target locus.