Ig gene conversion is most likely initiated by activation-induced cytidine deaminase-mediated cytosine deamination. If the resulting uracils need to be further processed by uracil DNA glycosylase (UNG), UNG inactivation should block gene conversion and induce transition mutations. In this study, we report that this is indeed the phenotype in the B cell line DT40. Ig gene conversion is almost completely extinguished in the UNG-deficient mutant and large numbers of transition mutations at C/G bases accumulate within the rearranged Ig L chain gene (IgL). The mutation rate of UNG-deficient cells is about seven times higher than that of pseudo V gene-deleted (psiV-) cells in which mutations arise presumably after uracil excision. In addition, UNG-deficient cells show relatively more mutations upstream and downstream of the VJ segment. This suggests that hypermutating B cells process activation-induced cytidine deaminase-induced uracils with approximately one-seventh of uracils giving rise to mutations depending on their position.