Saccharomyces cerevisiae strain A364A D5 contains circular double-stranded DNA molecules of 6230 +/- 30 base pairs (2mu DNA) which are present in 68 copies per cell and make up 2.4% of the haploid genome. About 0.4% of non-poly A containing yeast RNA hybridizes to the yeast DNA circles. When denatured and then self-annealed, the DNA molecules assume a characteristic "dumbbell" shape in the electron microscope indicating that each circle possesses a non-tandem inverted repeat sequence of 630 +/- 10 base pairs. Eco-RI digestion of purified 2mu DNA yields 4 fragments on an agarose gel whose combined molecular mass is twice that of the monomer circle, suggesting that there are 2 populations of circles, each of the same molecular weight. Representatives of each population have been separated by cloning in Escherichia coli via the bacterial plasmid pSC101. Heteroduplex analysis of the cloned circles show that the 2 different populations arise because of intramolecular recombination between the inverted repeat sequences. Acrylamide gel patterns of polypeptides synthesized in bacterial mini-cells containing the hybrid plasmids between 2mu DNA and pSC101 are significantly different than the pattern obtained from mini-cells containing pSC101 alone.