Plastid transformation technology involves the insertion by homologous recombination and subsequent amplification of plastid transgenes to approximately 10 000 genome copies per leaf cell. Selection of transformed genomes is achieved using a selectable antibiotic resistance marker that has no subsequent role in the transformed line. We report here a feasibility study in the model plant tobacco, to test the heterologous Cre/lox recombination system for antibiotic marker gene removal from plastids. To study its efficiency, a green fluorescent protein reporter gene activation assay was utilized that allowed visual observation of marker excision after delivery of Cre to plastids. Using a combination of in vivo fluorescence activation and molecular assays, we show that transgene excision occurs completely from all plastid genomes early in plant development. Selectable marker-free transplastomic plants are obtained in the first seed generation, indicating a potential application of the Cre/lox system in plastid transformation technology. In addition to the predicted transgene excision event, two alternative pathways of Cre-mediated recombination were also observed. In one alternative pathway, the presence of Cre in plastids stimulated homologous recombination between a 117 bp transgene expression element and its cognate sequence in the plastid genome. The other alternative pathway uncovered a plastid genome 'hot spot' of recombination composed of multiple direct repeats of a 5 bp sequence motif, which recombined with lox independent of sequence homology. Both recombination pathways result in plastid genome deletions. However, the resultant plastid mutations are silent, and their study provides the first insights into tRNA accumulation and trans-splicing events in higher plant plastids.