The entire DNA sequence of varicella-zoster virus (VZV) was determined using the M13-dideoxynucleotide technology. The genome is variable in size, but the sequence which was obtained comprises 124884 bp. Analysis of the sequence indicated that the genome contains 70 genes distributed about equally between the two DNA strands. The genes are organized compactly, but regions of overlap between protein-coding regions are not extensive. Many of the genes are arranged in 3'-coterminal families, and at least one is spliced. The discerned organization of VZV genes and that deduced for herpes simplex virus type 1 (HSV-1) from published transcript mapping data indicate that these two members of the Alphaherpesvirinae are very similar in gene layout. Comparisons of the predicted amino acid sequences of VZV proteins with those available for HSV-1 proteins generally suggest evolution from an ancestral genome, and allow the functions of several VZV genes to be deduced, although limited regions where the genomes differ in functional organization were also identified.