Structural analysis of two cDNA clones, derived from reverse transcripts of avian sarcoma virus 21S mRNA's, reveals unusual features in the organization and expression of the integrated avian sarcoma virus (ASV) proviral DNA and predicts a mechanism for recombination events that will lead to either the capture or the excision of the transforming gene of this virus. The latter is supported by our observation that there is an extensive homologous region on either side of the transforming gene that will allow site-specific deletion or integration to occur. Comparison of the clone derived from the src-specific 21S mRNA coding for the transforming gene product to that derived from the env-specific 21S mRNA coding for the envelope glycoprotein show that the common c region present at the 3' terminus of the ASV genome is 326 bases long. Within this c region are nucleotide sequences that may play key roles in the life cycle of this virus. These regulatory sequences include (i) probable promoter sites for the initiation of transcription, (ii) a polyadenylation signal, and (iii) a sequence that is complementary to the 3' termini of both the env and the src regions, which will allow the generation of transformation-defective deletions.