We have isolated several insertions of the transposable element IS1 into the proximal promoter (P3) of the beta-lactamase gene of plasmid pBR322, which do not abolish resistance to ampicillin. Using a transcription termination module (omega), we have shown that the gene can be expressed from hybrid promoters, created by the insertion of IS1. The terminal inverted repeats of IS1 carry sequences partially homologous to the "-35" consensus region. Splicing either of these sequences to the existing "-10" region of the beta-lactamase promoter by transposition of IS1 at the proper distance results in the formation of an active hybrid promoter. This interpretation was confirmed by transcription studies in vitro. Gene expression from the hybrid promoters was found to be less efficient than from P3. However, the orientation of IS1 that contributes a "-35" with the greater homology to the known "-35" consensus sequence is significantly more efficient than the other. In addition, we were able to assign a strong determinant of IS1 polarity to a 254 base-pair internal segment of IS1. An examination of the ends of many insertion sequences leads us to expect that the phenomenon described here may occur with several of these transposable elements, and may have an unexpected evolutionary significance.