Recombination of wild-type and mutant loxP sites mediated by wild-type Cre protein was analyzed in vivo using a sensitive phage P1 transduction assay. Contrary to some earlier reports, recombination between loxP sites was found to be highly specific: a loxP site recombined in vivo only with another of identical sequence, with no crossover recombination either between a wild-type and mutant site; or between two different mutant sites tested. Mutant loxP sites of identical sequence recombined as efficiently as wild-type. The highly specific and efficient recombination of mutant loxP sites in vivo helped in developing a procedure to progressively truncate DNA from either end of large genomic inserts in P1-derived artificial chromosomes (PACs) using transposons that carry either a wild-type or mutant loxP sequence. PAC libraries of human DNA were constructed with inserts flanked by a wild-type and one of the two mutant loxP sites, and deletions from both ends generated in clones using newly constructed wild-type and mutant loxP transposons. Analysis of the results provides new insight into the very large co-integrates formed during P1 transduction of plasmids with loxP sites: a model with tri- and possibly multimeric co-integrates comprising the PAC plasmid, phage DNA, and transposon plasmid(s) as intermediates in the cell appears best to fit the data. The ability to truncate a large piece of DNA from both ends is likely to facilitate functionally mapping gene boundaries more efficiently, and make available precisely trimmed genes in their chromosomal contexts for therapeutic applications.