The infection of Streptococcus pyogenes T25(3) with the temperate bacteriophage T12 results in the conversion of the nontoxigenic strain to type A streptococcal exotoxin (erythrogenic toxin) production. Although previous research has established that integration of the bacteriophage genome into the host chromosome is not essential for exotoxin production, the location of the gene on the bacteriophage or bacterial chromosome had not been determined. In the present investigation, recombinant DNA techniques were used to determine whether the gene specifying type A streptococcal exotoxin (speA) production is located on the bacteriophage chromosome. Bacteriophage T12 was obtained from S. pyogenes T25(3)(T12) by induction with mitomycin C, and after isolation of bacteriophage DNA by phenol-chloroform extraction, the DNA was digested with restriction enzymes and ligated with Escherichia coli plasmid pHP34 or the Streptococcus-E. coli shuttle vector pSA3. Transformation of E. coli HB101 with the recombinant molecules allowed selection of E. coli clones containing bacteriophage T12 genes. Immunological assays with specific antibody revealed the presence of type A streptococcal exotoxin in sonicates of E. coli transformants. Subcloning experiments localized the speA gene to a 1.7-kilobase segment of the bacteriophage T12 genome flanked by SalI and HindIII sites. Introduction of the pSA3 vector containing the speA gene into Streptococcus sanguis (Challis) resulted in transformants that secreted the type A exotoxin. Immunological analysis showed that the type A streptococcal exotoxin produced by E. coli and S. sanguis transformants was identical to the type A exotoxin produced by S. pyogenes T25(3)(T12). Southern blot hybridizations with the cloned fragment confirmed its presence in the bacteriophage T12 genome and its absence in the T25(3) nonlysogen. Therefore, the gene for type A streptococcal exotoxin is located in the bacteriophage genome, and conversion of S. pyogenes T25(3) to toxigenicity occurs in a manner similar to the conversion of Corynebacterium diphtheriae to toxigenicity by bacteriophage beta.