Several recombinant cowpox viruses were constructed and used to identify a viral gene that controls the production of hemorrhage in lesions caused by the Brighton Red strain of cowpox virus (CPV-BR). This gene is located in the KpnD fragment of CPV-BR DNA, between 31 and 32 kilobases from the end of the genome. This position corresponds well with that predicted from analyses of the DNA structures of spontaneously generated deletion mutants. The gene responsible for hemorrhage encodes a 38-kDa protein that is one of the most abundant early gene products. The 11-basepair sequence GAAAATATATT present 84 base pairs upstream of its coding region is also present upstream of three other early genes of vaccinia virus; therefore, this sequence may be involved in the regulation of transcription. There is extensive similarity between the predicted amino acid sequence of the 38-kDa protein and the amino acid sequences of several plasma proteins that are inhibitors of various serine proteases involved in blood coagulation pathways. This suggests that the viral protein may possess a similar biological activity, which may enable it to effect hemorrhage by inhibiting one or more of the serine proteases involved in the host's normal processes of blood coagulation and wound containment.The inoculation of cowpox virus (CPV) into the skin of various mammals (guinea pigs, rabbits, humans) results in lesions that exhibit edema, hypertrophy ofthe epidermis, and hemorrhage. Similar effects are produced in CPV lesions (pocks) in the chorioallantoic membrane of developing chicken embryos; there is extensive proliferation of ectodermal and mesodermal cells, edema, and localized hemorrhage that gives the pocks a deep red color (1).CPV variants that do not produce hemorrhage have been isolated from the white pocks that usually comprise up to 1% of the pocks present on chorioallantoic membranes infected with wild-type CPV (2, 3). The existence of these white-pock variants demonstrates that a viral function controls the production of the hemorrhage.Studies of the structures of the DNAs of these white-pock variants have shown that their genomes are generated from the genome of the wild-type virus by large deletions and duplications of sequences (4, 5). Similar results have been obtained from studies of the DNAs of white-pock variants of rabbitpox virus and monkeypox virus (6-8). The rearrangements of DNA that generate the white-pock variants of CPV typically involve the replacement of up to 39 kilobases (kb) of one end of the genome with an inverted copy of up to 50 kb of DNA from the other end (4, 5). The mechanisms by which these rearrangements proceed are unknown; but it is clear that there are no identifiable homologous sequence elements at the sites of the duplication/deletion end points (5). This result suggests that it is the location of essential genes rather than DNA sequence content that limits where rearrangements may occur. The position ofgenes that encode markers, such as production of hemorrhage, will place a further cons...