In a previous study (G. M. Wahl, B. Robert de Saint Vincent, and M. L. De Rose, Nature (London) 307:516-520, 1984), we used gene transfer of a CAD cosmid to demonstrate that gene position profoundly affects amplification frequency. One transformant, T5, amplified the donated CAD genes at a frequency at least 100-fold higher than did the other transformants analyzed. The CAD genes in T5 and two drug-resistant derivatives were chromosomally located. In this report, we show that a subclone of T5 gives rise to an extrachromosomal molecule (CAD episome) containing the donated CAD genes. Gel electrophoresis indicated that the CAD episome is approximately 250 to 300 kilobase pairs, and a variety of methods showed that it is a covalently closed circle. We show that the CAD episome replicates semiconservatively and approximately once per cell cycle. Since the CAD cosmid, which comprises most of the CAD episome, does not replicate autonomously when transfected into cells, our results indicate that either the process which generated the episome resulted in a cellular origin of DNA replication being linked to the CAD sequences or specific rearrangements within the episome generated a functional origin. The implications of these results for mechanisms of gene amplification and the genesis of minute chromosomes are discussed.