Virus-derived gene transfer vectors have been successfully employed to express the transcription activator-like effector nucleases (TALENs) in mammalian cells. Since the DNA-binding domains of TALENs consist of the variable di-residue (RVD)-containing tandem repeat modules and virus genome with repeated sequences is susceptible to genetic recombination, we investigated several factors that might affect TALEN cleavage efficiency of baculoviral vectors. Using a TALEN system designed to target the AAVS1 locus, we observed increased sequence instability of the TALE repeat arrays when a higher multiplicity of infection (MOI) of recombinant viruses was used to produce the baculoviral vectors. We also detected more deleterious mutations in the TALE DNA-binding domains when both left and right TALEN arms were placed into a single expression cassette as compared to the viruses containing one arm only. The DNA sequence changes in the domains included deletion, addition, substitution, and DNA strand exchange between the left and right TALEN arms. Based on these observations, we have developed a protocol using a low MOI to produce baculoviral vectors expressing TALEN left and right arms separately. Cotransduction of the viruses produced by this optimal protocol provided an improved TALEN cleavage efficiency and enabled effective site-specific transgene integration in human cells.