The moss Physcomitrella is unique among plants in that it permits efficient gene targeting by homologous recombination. Furthermore, transformed DNA can replicate episomally in Physcomitrella. Here we show that episomally replicating DNA can be rescued back into Escherichia coli, and we use such rescue to study the fate of the transformed DNA. Significantly, plasmids rescued from moss transformed with circular DNA are identical to the original plasmid, whereas plasmids rescued from moss transformed with linearized DNA frequently have deletions created by direct repeat recombination. These events are highly predictable in that they target the longest direct repeat on the plasmid if this repeat is at least 12 bp. Episomal transformants obtained with linearized DNA show a more than 1,000-fold amplification of the DNA whereas transformants obtained with circular DNA have much lower copy numbers. Most episomal transformants quickly lose the plasmid in the absence of selection, but a semistable type of transformant that loses the plasmid at a much lower frequency was also observed. The consistent rescue of the original plasmid, or of predictable derivatives thereof, suggests that molecular genetics methods which rely on shuttle plasmids are feasible in Physcomitrella.