The noncoding DNA region of the chloroplast genome, flanked by the genes rbcL and psaI (ORF36), has been sequenced for seven species of the grass family (Poaceae). This region had previously been observed as a hotspot area for length mutations. Sequence comparison reveals that short duplications, probably resulting from slipped-strand mispairing, account for many small length differences between sequences but that major mutational hotspots are localized in three small areas, two of which show potential secondary structure. Mutation in one of these hotspots appears to be a result of more complex recombination events. All seven species contain a pseudogene for rpl23 and evidence is presented that this pseudogene is being maintained by gene conversion with the functional gene. Different transition/transversion biases and AT contents between the pseudogene and the surrounding noncoding sequences are noted. In the subfamily Panicoideae there is a deletion in which almost 1 kb of ancestral sequence, including the 3' end of the rpl23 pseudogene, has been replaced by a non-homologous 60-base sequence of unknown origin. Two other deletions of almost the same region have occurred in the grass family. The deleted noncoding region has mutational and compositional properties similar to the rbcL coding sequence and the rpl23 pseudogene. The three independent deletions, as well as the pattern of mutation in the localized hotspots, indicate that such noncoding DNA may be misleading for studies of phylogenetic inference.