A plasmid containing a genomic human insulin clone was microinjected into a pronucleus of the fertilised mouse egg. Eggs were subsequently transferred into oviducts of pseudopregnant Swiss/Alb females. Embryos developed to term and the DNA was extracted from different organs. Southern blotting analyses revealed 1 transgenic female out of 96 animals born after microinjection of C57BL/6 mouse eggs. A tandem integration was found at one locus within the mouse genome and molecular rearrangement was found within this locus. The structure of the entire locus was identical in DNA from all tissues. Both the human insulin gene sequences and the pBR322 sequences were found to be extensively methylated, although some sites were hypomethylated in the pancreas and liver. The transgenic female produced ten offspring, none of which retained the insulin gene sequences. Seven offspring retained some pBR322 sequences which were stably transmitted to the F2 and F3 generations. Homozygous F3 delta pBR/delta pBR animals were obtained, which showed neither visible defects nor sterility. The loss of the tandem locus in the F1 generation did not seem to be due to mosaicism, but involved excision due to recombination. Sequences close to the ends of the tandem locus were involved in this event. A mechanism implying excision during germ cell formation is discussed.