Chimeric plasmids containing phage M13 and plasmid pBR322 sequences undergo deletions in Escherichia coli with a high frequency. In all plasmids one deletion endpoint is the M13 replication origin nick site. We examined the effects of transcription on the position of the other deletion end-point, by inserting in the plasmids an inducible promoter followed by a transcription terminator. Transcription dramatically affected deletions in an orientation-dependent way, such that greater than 95% of end-points were localized downstream from the inserted promoter when it faced the major plasmid transcripts. The end-points were not constrained to the transcribed region and were not affected by the orientation of pBR322 DNA replication. We propose that deletion events occur preferentially in a plasmid domain which is rendered positively supercoiled by convergent transcription. We also show that interaction of LacI repressor with the cognate operator generates a localized deletion hot spot. This hot spot is dependent on pBR322 replication, and therefore probably acts by arresting progression of DNA replication.