In chickens, there is a single functional gene (VH1) coding for the heavy chain variable region of immunoglobulins, and immunoglobulin diversity is generated by gene conversion of the VH1 gene by many variable region pseudogenes (psi VH's) that exist on the 5' side of the VH1 gene. To understand the evolution of this unique genetic system, we conducted statistical analyses of VH1 and psi VH genes together with functional VH genes from other higher vertebrate species. The results indicate, first, that chicken VH genes are all closely related to one another and were derived relatively recently from an ancestral gene belonging to one of the three major groups of VH genes in higher vertebrates. Second, the rate of nonsynonymous substitution is slightly higher than that of synonymous substitution in the complementarity-determining regions (CDRs), which suggests that diversity-enhancing selection has operated in the CDRs even for pseudogenes. However, both the rates of synonymous and nonsynonymous substitution are higher in the CDRs than in the framework regions (FRs), apparently because of an interaction between positive selection and meiotic gene conversion in the CDRs. Third, a dot matrix analysis of the psi VH genes and genomic diversity (D) genes has indicated that the 3' end of psi VH genes is attached by D-gene-like sequences, and this region of psi VH genes has high similarity with D gene sequences. This suggests that V and D genes were fused at some point of evolutionary time and this fused element multiplied by gene duplication. Finally, two alternative hypotheses of explaining the evolution of the chicken VH gene system are presented.