Rearranged Ig V regions undergo activation-induced cytidine deaminase (AID)-initiated diversification in sequence to produce either nontemplated or templated mutations, in the related pathways of somatic hypermutation and gene conversion. In chicken DT40 B cells, gene conversion normally predominates, producing mutations templated by adjacent pseudo-V regions, but impairment of gene conversion switches mutagenesis to a nontemplated pathway. We recently showed that the activator, E2A, functions in cis to promote diversification, and that G(1) phase of cell cycle is the critical window for E2A action. By single-cell imaging of stable AID-yellow fluorescent protein transfectants, we now demonstrate that AID-yellow fluorescent protein can stably localize to the nucleus in G(1) phase, but undergoes ubiquitin-dependent proteolysis later in cell cycle. By imaging of DT40 polymerized lactose operator-lambda(R) cells, in which polymerized lactose operator tags the rearranged lambda(R) gene, we show that both the repair polymerase Poleta and the multifunctional factor MRE11/RAD50/NBS1 localize to lambda(R), and that lambda(R)/Poleta colocalizations occur predominately in G(1) phase, when they reflect repair of AID-initiated damage. We find no evidence of induction of gamma-H2AX, the phosphorylated variant histone that is a marker of double-strand breaks, and Ig gene conversion may therefore proceed by a pathway involving templated repair at DNA nicks rather than double-strand breaks. These results lead to a model in which Ig gene conversion initiates and is completed or nearly completed in G(1) phase. AID deaminates ssDNA, and restriction of mutagenesis to G(1) phase would contribute to protecting the genome from off-target attack by AID when DNA replication occurs in S phase.