A new self-sustained terminal protein-primed DNA amplification system has been used to describe in vitro evolutionary changes affecting maintenance of the genome size of bacteriophage phi29. These changes involve generation and efficient amplification of short palindromic molecules containing an inverted duplication of one of the original DNA ends. A template-switching mechanism is proposed to account for the appearance of these molecules. After their formation, they would replicate by means of hairpin intermediates. Relevant kinetic information about this DNA replication system has been obtained from the competition between the input full-length phi29 DNA and its derived truncated versions. The physiological relevance of these molecules and the mechanisms to control their formation are discussed.