The region of Saccharomyces cerevisiae chromosome III centromere-distal to the PGK gene is the site of frequent chromosome polymorphisms. We have sequenced this region from fragments of chromosome III isolated from three different yeast strains, GRF88, CN31C and CF4-16B. The sequence analysis demonstrates that these polymorphisms are associated with the presence of Ty and delta elements and defines a region of the chromosome which is a hot-spot for transposition events (the RAHS). The three strains can be arranged into a logical evolutionary series in which successive transposition and recombination events insert Ty elements and fuse them with consequent deletions of chromosome and of transposon sequences. The influence of such events on yeast genome evolution is discussed.