Selective gene amplification is associated with normal development, neoplasia, and drug resistance. One class of amplification events results in large arrays of inverted repeats that are often complex in structure, thus providing little information about their genesis. We made a recombination substrate in Saccharomyces cerevisiae that frequently generates palindromic duplications to repair a site-specific double-strand break in strains deleted for the SAE2 gene. The resulting palindromes are stable in sae2Delta cells, but unstable in wild-type cells. We previously proposed that the palindromes are formed by invasion and break-induced replication, followed by an unknown end joining mechanism. Here we demonstrate that palindrome formation can occur in the absence of RAD50, YKU70, and LIG4, indicating that palindrome formation defines a new class of nonhomologous end joining events. Sequence data from 24 independent palindromic duplication junctions suggest that the duplication mechanism utilizes extremely short (4-6 bp), closely spaced (2-9 bp), inverted repeats to prime DNA synthesis via an intramolecular foldback of a 3' end. In view of our data, we present a foldback priming model for how a single copy sequence is duplicated to generate a palindrome.