The Drosophila melanogaster transposable element 412 is transiently unstable in Saccharomyces cerevisiae when present on a freely replicating plasmid. The 412 element undergoes recombination to form two circular molecules, a 412 deletion plasmid and, presumably, a 412 circle. The 412 deletion plasmid contains a single long terminal repeat which most likely is the result of homologous recombination within the long terminal repeats. This recombination occurs at or shortly after transformation and is independent of both the RAD52 gene product and the Flp gene of 2 micron DNA.