Histoplasma capsulatum is a dimorphic pathogenic fungus that is a major cause of respiratory and systemic mycosis. We previously developed a transformation system for Histoplasma and demonstrated chromosomal integration of transforming plasmid sequences. In this study, we describe another Histoplasma mechanism for maintaining transforming DNA i.e. the generation of modified, multicopy linear plasmids carrying DNA from the transforming Escherichia coli plasmid. Under selective conditions, these linear plasmids were stable and capable of retransforming Histoplasma without further modification. In vivo modification of the transforming DNA included duplication of plasmid sequence and telomeric addition at the termini of linear DNA. Apparently Histoplasma telomerase, like that of other organisms such as humans and Tetrahymena, is able to act on non-telomeric substrates. The terminus of a Histoplasma linear plasmid was cloned and shown to contain multiple repeats of GGGTTA, the telomeric repeat unit also found in vertebrates, trypanosomes, and slime moulds.