The adeno-associated virus (AAV) genome is a linear, single polynucleotide chain with inverted terminal repeats of 145 bases. In order to test whether the terminal repeats at opposite ends of the genome have to be able to completely base-pair during DNA replication, we have created chimeric genomes in which an 11 base symmetrical sequence has been deleted from the terminal repeat at one end of the genome and replaced by a different 12 base symmetrical sequence. We have used these chimeric constructs either as a duplex insert in pBR322 or as purified duplex virion DNA to transfect adenovirus-infected HeLa cells. When chimeric duplex virion DNA was used, all of the progeny virions obtained after two cell passages contained DNA with wild-type sequences in both terminal repeats. When plasmid clones were used, the structure of virion DNA depended on the original orientation. If the mutant terminal repeat was originally at the right end of the genome (terminus of genetic map), all progeny terminal repeat sequences were again wild-type. However, if the original construct contained the mutant sequence in the left terminal repeat, the majority of progeny molecules were parental in type (i.e. mutant left and wild-type right terminal repeat). We conclude (1) although the terminal repeats at opposite ends of the genome may interact during DNA replication, it is not necessary that they be perfectly complementary. (2) In direct competition, the wild-type sequence displays an advantage over the mutant allele. (3) In a plasmid clone, the terminal repeat on the left end of the genome is at an advantage in a competitive situation. We note that the left terminal repeat is adjacent to a transcriptional promoter.