Activation of a single incomplete P element induces recombination at a rate of 0.5-1% in the male germline of Drosophila. Male recombination rises by an order of magnitude to 20% if homologous P elements are involved. The high rate of recombination suggests the possibility that sister-chromatid exchange (SCE) might be elevated to a similar extent, since homologous P elements must always be present in sister chromatids. This possibility was tested by recombining a single P element onto a ring-X chromosome and using sex-ratio distortion to measure the loss of the ring-X due to SCE in the male germline. The results confirmed a rate of loss comparable to that expected with homologous elements, although the rate of loss was variable. Both SCE and recombination results are consistent with the ''hybrid element insertion'' model, in which the left and right ends from different elements associate, providing that insertion occurs preferentially in the vicinity of a P-element end. For autosomes, hybrid element formation may thus occur at a much higher rate than the 0.5-1% implied by single element recombination, with only a small minority of hybrid element excision events being resolved by recombination. P elements induce male recombination at a low rate in crosses between wild and laboratory strains of Drosophila melanogaster (Hiraizumi 1971). Comparable levels of recombination can be produced by a single incomplete P element when activated by a transposase source (Sved et al. 1990). Furthermore, the level of recombination rises from ,1% to 20% if P elements are present at homologous sites on the two chromosomes (Sved et al. 1991).A likely mechanism for this recombination was elucidated by Gray et al. (1996), who showed that recombination can be produced when an element containing only an intact left end is brought together with an element on the homologous chromosome containing only an intact right end. The only possibility for association in this case involves ends from different chromosomes, associating to form a ''hybrid element. '' Preston et al. (1996) showed that this model can account for recombination produced by a single P element if the left and right ends that associate in a hybrid element come from sister chromatids. The model of hybrid element insertion, together with the complementary process of ''hybrid element repair,'' can account for most aspects of the recombination process. The clustering of recombinant products suggests that in males these processes occur primarily in the mitotic divisions preceding meiosis. P-element-induced recombination has not been studied in females owing to the high background of meiotic recombination.The hybrid insertion model predicts that sisterchromatid exchange (SCE) should occur at comparable levels to nonsister recombination. Such SCE is, however, difficult to detect, since it has no genetical consequences. Furthermore, the high elevation of recombination caused by the presence of homologous P elements suggests the possibility that SCE might be similarly elevated...