A 1,400-base-pair (bp) region within the BamHI H fragment of Epstein-Barr virus (EBV) (B95-8) DNA consists of a cluster of tandemly duplicated direct repetitions characterized by single sites for the NotI restriction endonuclease. Nucleotide sequencing revealed a 125-bp repeat unit of 84% guanine-plus-cytosine content which is theoretically capable of extensive secondary structure formation. The flanking sequences adjacent to the NotI repeat cluster contained an additional 38-bp portion of repeat unit DNA, thus establishing that EBV(B95-8) contains a nonintegral number of NotI repeats totalling 11.3 copies. Restriction site mapping of the homologous cloned BamHI "H" fragment from the nontransforming EBV (P3HR-1) isolate revealed that a contiguous 6,650-bp region including the entire NotI repeat cluster has been deleted from the BamHI-H, -Y, and -W regions of the P3HR-1 genome. By nucleotide sequencing across the novel junction, we have precisely identified the P3HR-1 deletion boundaries in BamHI-H and the internal repeat and suggest that a complex pattern of direct and inverted partial DNA homologies may have been involved in the original recombination event. The cloned BamHI H fragment and isolated NotI repeat unit have also been used as probes to detect homologous mRNA transcripts in the B95-8 and Raji cell lines of EBV-transformed lymphoblasts. These experiments showed that the NotI repeats form part of the template for a polyadenylated 2.5-kilobase mRNA transcript which becomes much more abundant after 12-O-tetradecanoyl-phorbol-13-acetate treatment of the cultures. The direction of transcription of this mRNA and the nucleotide sequence of most of its template and 5' flanking regions have been determined. The probable promoter for the 2.5-kilobase mRNA initiates transcription efficiently in an in vitro assay and contains several TAATGA-like elements that may be indicative of herpesvirus immediate-early class promoters. The need to repress expression of this gene during latency suggests a possible novel regulatory role for tandem repeat structures inside a eucaryotic virus transcription unit. The deletion in EBV(P3HR-1), which has been associated with the loss of lymphocyte "immortalizing" capacity in this isolate, eliminates part of the coding region as well as the NotI repeats from the 2.5-kilobase mRNA transcript, but the promoter and proximal 340-bp portions of the template remain.