We have analyzed immunoglobulin light chain sequences from avian leukosis virus (ALV) induced bursal and metastatic tumors and from cell lines derived from these tumors. Sequence data presented demonstrate that ALV-induced tumors and one cell line (DT40) derived therefrom continue to diversify their light chain genes outside of the bursal environment. Diversification within these tumor cells seems to occur by gene conversion events comparable with those observed in bursal B cells. Sequence analysis of spontaneously arising surface immunoglobulin negative subclones of the DT40 cell line revealed frameshifts within the rearranged light chain genes which most likely resulted from non-functional recombination events. Superimposed gene conversion events can repair these frameshifts leading to re-expression of surface immunoglobulin.