Mycoplasma hyorhinis contains clustered vlp genes encoding variable lipoproteins (Vlps), the major coat proteins and surface antigens of this wall-less prokaryotic pathogen. vlp genes are subject to discrete, high frequency mutations independently affecting the size or the expression of variant Vlp products. Change in Vlp size occurs by mutations altering the number of tandem intragenic repeats at the 3' end of each single-copy vlp gene. In this report, phase-variant Vlp expression is shown to result from altered vlp gene transcription. vlpA, vlpB and vlpC transcripts were monitored in a clonal lineage selected to display various Vlp phenotypes. Each vlp gene was expressed as a distinct transcript, which was subject to drastic ON/OFF switches associated with random insertion/ deletion mutations in a homopolymeric tract of adenine residues in the promoter region of all vlp genes. Unexpectedly, the level of vlp transcripts appeared to depend on the length of the corresponding genes in the ON configuration. Higher proportional levels of shorter vlp transcripts were shown to reflect a greater abundance of short Vlp lipoproteins present in L-[35S]-cysteine-labelled membrane protein preparations. The vlp cluster provides a heritable, and highly mutable, locus for the generation of surface diversity through random promoter mutations affecting the expression of genes, whose products also vary in length and abundance, by virtue of separate mutations in structural regions of the genes.