We describe a karyotypic polymorphism on the zebra finch Z chromosome. This polymorphism was discovered because of a difference in the position of the centromere and because it occurs at varying frequencies in domesticated colonies in the USA and Germany and among two zebra finch subspecies. Using DNA fluorescent in situ hybridization to map specific Z genes and measurements of DNA replication, we show that this polymorphism is the result of a large pericentric inversion involving the majority of the chromosome. We sequenced a likely breakpoint for the inversion and found many repetitive sequences. Around the breakpoint, there are numerous repetitive sequences and several copies of PAK3 (p21-activated kinase 3)-related sequences (PAK3Z) which showed testes-specific expression by RT-PCR. Our findings further suggest that the sequenced genome of the zebra finch may be derived from a male heterozygote for the Z chromosome polymorphism. This finding, in combination with regional differences in the frequency of the polymorphism, has important consequences for future studies using zebra finches.