The principal objectives of this study were to analyze the structure and coding potential of a long segment of DNA missing from a previously isolated (B. Moss, E. Winters, and J. A. Cooper (1981) J. Virol. 40, 387-395) attenuated variant of vaccinia virus strain WR and to examine the precise changes in the genome accompanying the deletion. The sequences of a 14.5-kbp region located at the left end of the standard vaccinia virus genome, extending from within the inverted terminal repetition (ITR) of the HindIII C fragment to the end of the HindIII N fragment, and of a 3-kbp segment from a corresponding region of the variant genome were determined. A comparison of these sequences revealed that the variant contained a deletion of 12 kbp and an insertion of 2.1 kbp. The origin of the inserted DNA was traced to the HindIII B region by using oligonucleotide probes indicating that a transposition of unique DNA located adjacent to the right ITR had occurred. Structural analysis indicated no extensive homologies, nucleotide substitutions, additions, or deletions at the boundaries of the transposed DNA. Examination of the right end of the variant genome indicated that a copy of the transposed DNA was still present and, therefore, the length of the ITR had been increased by 2.1 kbp. The variant genome could have formed by a mechanism that resulted in the replacement of a 22-kbp left-terminal fragment with a 12-kbp right-terminal fragment. The DNA missing from the variant and contained within the standard vaccinia virus WR genome contains 17 contiguous open reading frames (ORFs), all of which are directed leftward and apparently not required for replication in cultured cells. One deleted ORF has a 60% sequence similarity to another gene encoding a 42,000-Da protein present within the ITR suggesting that duplications have previously occurred during the evolution of vaccinia virus. Another deleted ORF has a 39% sequence similarity to a complement 4b binding protein. The transposed DNA contains two complete ORFs one of which has a 40% identity to a cowpox gene and a 30% identity to a family of plasma serine protease inhibitors.