The cytopathogenic bovine viral diarrhoea virus (cp BVDV) strain KS86-1cp was isolated from a calf persistently infected with the noncytopathogenic (ncp) strain KS86-1ncp after it was exposed to cp BVDV strain Nose and developed mucosal disease (MD). Molecular analysis revealed that an insertion of a cellular gene and a duplication of the viral RNA encoding the nucleocapsid protein C and part of N(pro) had occurred in the C coding region of the Nose and KS86-1cp genomes. The inserted cellular gene was closely related to the cINS sequence. Remarkably, the 5' upstream region from the insertion of KS86-1cp had high sequence identity to that of Nose, but differed from that of KS86-1ncp. In contrast, the region downstream from the insertion of KS86-1cp showed high identity to KS86-1ncp, but not to Nose. These data reveal that KS86-1cp is a chimeric virus generated by homologous RNA recombination in a calf with MD.