The 5' end of the breast and ovarian cancer-susceptibility gene BRCA1 has previously been shown to lie within a duplicated region of chromosome band 17q21. The duplicated region contains BRCA1 exons 1A, 1B, and 2 and their surrounding introns; as a result, a BRCA1 pseudogene (PsiBRCA1) lies upstream of BRCA1. However, the sequence of this segment remained essentially unknown. We needed this information to investigate at the nucleotide level the germline deletions comprising BRCA1 exons 1A, 1B, and 2, which we had previously identified in two families with breast and ovarian cancer. We have analyzed the recently deposited nucleotide sequence of the 1.0-Mb region upstream of BRCA1. We found that 14 blocks of homology between the tandemly repeated copies (cumulative length = 11.5 kb) show similarity of 77%-92%. Gaps between blocks result from insertion or deletion, usually of repetitive elements. BRCA1 exon 1A and PsiBRCA1 exon 1A are 44.5 kb apart. In the two families with breast and ovarian cancer mentioned above, distinct homologous recombination events occurred between intron 2 of BRCA1 and intron 2 of PsiBRCA1, leading to 37-kb deletions. Breakpoint junctions were found to be located at close but distinct sites within segments that are 98% identical. The mutant alleles lack the BRCA1 promoter and harbor a chimeric gene consisting of PsiBRCA1 exons 1A, 1B, and 2, which lacks the initiation codon, fused to BRCA1 exons 3-24. Thus, we report a new mutational mechanism for the BRCA1 gene. The presence of a large region homologous to BRCA1 on the same chromosome appears to constitute a hot spot for recombination.