The human X and Y chromosomes share many blocks of similar DNA sequence. We conducted mapping and nucleotide sequencing studies of extensive, multi-megabase homologies between Yp and Xq21, which do not recombine during male meiosis. We confirmed and built upon previous evidence that a Yp inversion had occurred during evolution: a single contiguous segment of Xq21 is homologous to two non-contiguous segments of Yp. We precisely defined and sequenced the inversion breakpoints, obtaining evidence that the inversion was mediated by recombination between LINE-1 elements in otherwise non-homologous regions. This inversion appears to have followed a single transposition of an approximately 4 Mb segment from the X to the Y chromosome. These events jointly account for the present arrangement of Yp-Xq21 homologous sequences. Based on Southern blotting studies of primates and of humans drawn from diverse populations, we conclude that both the X-Y transposition and the subsequent, LINE-mediated Yp inversion occurred after the divergence of hominid and chimp lineages but before the radiation of extant human populations. This evolutionary scenario is consistent with our finding of 99.3 +/- 0.2% nucleotide identity between the X and Y chromosomes within the transposed region, which suggests that the transposition occurred approximately 3-4 million years ago, near the time of emergence of Homo . Comparative sequencing of the entire human X and Y chromosomes may reveal a succession of transpositions, inversions and other rearrangements underlying the complex pattern of sequence similarities between the present-day sex chromosomes. With the possible exception of cubitus valgus, phenotypic features of Turner syndrome are absent in individuals monosomic for Yp-Xq21 homologous sequences, suggesting that most of the critical 'Turner genes' are found elsewhere on the X and Y chromosomes.