Neural ganglia of wild type third-instar larvae of Drosophila melanogaster were incubated for 13 hours at various concentrations of BUdR (1, 3, 9, 27 micrograms/ml). Metaphases were collected with colchicine, stained with Hoechst 33258, and scored under a fluorescence microscope. Metaphases in which the sister chromatids were clearly differentiated were scored for the presence of sister-chromatid exchanges (SCEs). At the lowest concentration of BUdR (1 microgram/ml), no SCEs were observed in either male or female neuroblasts. The SCEs were found at the higher concentrations of BUdR (3, 9, And 27 micrograms/ml) and with a greater frequency in females than in males. Therefore SCEs are not a spontaneous phenomenon in D. melanogaster, but are induced by BUdR incorporated in the DNA. A striking nonrandomness was found in the distribution of SCEs along the chromosomes. More than a third of the SCEs were clustered in the junctions between euchromatin and heterochromatin. The remaining SCEs were preferentially localized within the heterochromatic regions of the X chromosome and the autosomes and primarily on the entirely heterochromatic Y chromosome.--In order to find an alternative way of measuring the frequency of SCEs in the Drosophila neuroblasts, the occurrence of double dicentric rings was studied in two stocks carrying monocentric ring-X chromosomes. One ring chromosome, C(1)TR94--2, shows a rate of dicentric ring formation corresponding to the frequency of SCEs observed in the BUdR-labelled rod chromosomes. The other ring studied, R(1)2, exhibits a frequency of SCEs higher than that observed with both C(1) TR94--2 and rod chromosomes.