Primate Alu and rodent Alu-like elements comprise major families of mammalian small dispersed repetitive DNAs. These elements are repeated more than 10(5) times per haploid genome and are found between known genes, in introns and in satellite DNA. Their dispersion throughout the genome and the presence of directly repeated DNA sequences flanking the elements suggest, but do not prove, that they are capable of transposition. We describe here an allelic variation in the 5'-flanking region of the rat prolactin gene that offers the opportunity to examine the sequences of matching regions of two homologous chromosomes which differ in the presence of an Alu-like repetitive DNA element. Our findings support the hypothesis that these elements are integrated into the genome by generating short direct repeats of host DNA.