Chicken immunoglobulin light chain (IgL) gene rearrangement has been characterized. Rearrangement of the single variable (VL) segment with the single joining (JL) segment within the chicken IgL locus results in the deletion of the DNA between VL and JL from the genome. This deletion is accomplished by a molecular mechanism in which a precise joining of the IgL recombination signal sequences leads to the formation of a circular episomal element. The circular episome is an unstable genetic element that fails to be propagated during B cell development. Evidence was obtained that the formation of the circular episome is accompanied by the addition of a single nonrandom base to both the VL and JL coding segments. The subsequent joining of the VL and JL segments appears to occur at random, as we observed at least 25 unique V-J junction sequences, 11 of which are out-of-frame. A novel recombination mechanism that accounts for the observed features of chicken IgL gene rearrangement is discussed.