It has long been suspected that chloroplasts evolved after an endosymbiotic event involving a photosynthetic prokaryote, presumably a cyanobacterium, and a eukaryotic organism. Recent studies have provided strong evidence about the cyanobacterial nature of chloroplasts. Since the discovery of prochlorophytes, oxygen-evolving photosynthetic prokaryotes containing chlorophyll a and chlorophyll b and lacking phycobiliproteins, there has been speculation that these represent evolutionary intermediates between cyanobacteria and chloroplasts. Prochloron sp., the first described prochlorophyte, proved difficult to work with because it is an obligate symbiont of marine ascidians. Prochlorothrix hollandica, a recently isolated, freshwater filamentous prochlorophyte, is easily maintained in the laboratory. Overall pigment composition and thylakoid membrane structure of P. hollandica suggest it has intermediate characteristics between cyanobacteria and the chloroplasts of higher plants. The P. hollandica psbA genes, which encode the photosystem II thylakoid protein D1, were cloned and sequenced and the sequences compared to those reported for cyanobacteria, a green alga, a liverwort, and several higher plants. The two psbA genes present in P. hollandica encode an identical amino-acid sequence. As in all chloroplast psbA genes, there is a seven amino-acid gap near the C terminus of the derived protein relative to the protein predicted by cyanobacterial genes, suggesting that P. hollandica is part of the lineage that led to chloroplasts after a divergence from cyanobacteria. This hypothesis is also supported by phylogenetic analysis of derived D1 amino-acid sequences from psbA genes of thirteen taxa on the basis of parsimony.