Acetobacter pasteurianus NCI1380, a thermophilic strain isolated from the surface culture of acetic acid fermentation, showed genetic instability to produce at high frequency spontaneous mutants which were deficient in ethanol oxidation because of the loss of alcohol dehydrogenase activity. Southern hybridization experiments with the cloned alcohol dehydrogenase-cytochrome c gene cluster as the probe showed insertion of an unknown DNA fragment into a specific position in the cytochrome c gene in most of the mutant strains. Cloning and sequencing analyses revealed that the inserted sequence was 1,665 bp in length and had a terminal inverted repeat of 15 bp. In addition, this inserted sequence was found to generate a 4-bp duplication at the inserted site upon transposition. The target site specificity was not very strict, but a TCGA sequence appeared to be preferentially used. The inserted sequence contains two long open reading frames of 461 and 222 amino acids which are overlapped and encoded by different strands. Although these open reading frames showed no homology to any protein registered in the DNA data bases, the longer open reading frame contained many basic amino acids (87 of 461), as was observed with transposases of so-called insertion sequence (IS) elements. All of these characteristics are typical of IS elements, and the sequence was named IS1380. The copy number of IS1380 in a cell of A. pasteurianus NCI1380 was estimated to be about 100. Several strains of acetic acid bacteria also contained IS1380 at high copy numbers. These results suggest that IS1380 is associated with the genetic loss of ethanol-oxidizing ability as well as the genetic instability of acetic acid bacteria in general.