The complete DNA sequence of plasmid pHZ1358, a widely used vector for targeted gene disruption and replacement experiments in many Streptomyces hosts, has been determined. This has allowed a detailed analysis of the basis of its structural and segregational instability, compared to the high copy number plasmid pIJ101 of Streptomyces lividans 1326 from which it was derived. A 574-bp DNA region containing sti (strong incompatibility locus) was found to be a determinant for segregational instability in its original S. lividans 1326 host, while the structural instability was found to be related to the facile deletion of the entire Escherichia coli-derived part of pHZ1358, mediated by recombination between 36-bp direct repeats. A point mutation removing the BamHI site inside the rep gene encoding a replication protein (rep*) and/or a spontaneous deletion of the 694-bp region located between rep and sti including the uncharacterized ORF85 (orf85(-)) produced little or no effect on stability. A pHZ1358 derivative (pJTU412, sti(-), rep*, orf85(-)) was then constructed which additionally lacked one of the 36-bp direct repeats. pJTU412 was demonstrated to be structurally stable but segregationally unstable and, in contrast to sti(+) pHZ1358, allowed efficient targeted gene replacement in S. lividans 1326.