Herpes simplex virus type 1 (HSV-1) is a neurotrophic human pathogen that naturally persists in neurons in a latent state and carries a large number of viral functions which can be replaced by foreign genes to create a vector for gene therapy applications. In this report we describe a two-step method for insertion/deletion mutagenesis of HSV genes and the efficient insertion of transgenes into these locations in the viral genome. The first step is the insertion of a reporter gene (lacZ) cassette flanked by Pacl restriction enzyme sites not otherwise found in the viral genome, using standard marker transfer procedures to interrupt a portion of the target HSV gene. The second step is substitution of the reporter gene with other foreign cDNAs by digestion of the vector DNA with Pacl to remove the lacZ gene and subsequent repair of the vector genome by homologous recombination with a transgene expression plasmid. Potential recombinants identified by a 'clear plaque' phenotype after X-gal staining arose at high frequency (80-100%). Of these recombinants containing the transgene in place of the lacZ gene ranged from 19-65%. Insertion of the transgene expression construct into the viral genome eliminates the Pacl sites, allowing this method to be used repeatedly for the sequential deletion of multiple HSV genes while inserting multiple transgenes. This procedure was repeated in succession to produce a vector carrying two independent expression cassettes at distinct viral loci.