The 7.5-kilobase BamHI E fragment (BamHI-E) of herpes simplex virus type 2 (HSV-2) DNA (map position 0.533-0.583) encodes the 144-kDa subunit of ribonucleotide reductase and induces the neoplastic transformation of immortalized cell lines. To define the minimal transforming region of BamHI-E, a series of subclones were constructed that spanned the entire fragment. These subclones were assayed for focus formation in Rat-2 cells. Removal of the promoter region from the viral 144-kDa-protein gene left the transforming activity of DNA clones intact. A 481-bp Pst I-Sal I subclone of BamHI-E was capable of inducing focus formation and tumorigenic conversion. The nucleotide sequence of this fragment and the colinear nontransforming region of HSV-1 DNA was determined and compared. Striking differences were detected in the structure and organization of repeated sequence elements. Specifically, transforming HSV-2 DNA contains multiple regions of alternating purines and pyrimidines, G + C-rich sequences that are potential binding sites for transcription factor Sp1, and insertion-like sequence elements that are interrupted by base substitutions in nontransforming HSV-1 DNA. These results define a distinct transforming domain in HSV-2 DNA composed of repetitive elements implicated in gene rearrangement and activation.