Gene amplification in eukaryotes plays an important role in drug resistance, tumorigenesis, and evolution. The Schizosaccharomyces pombe sod2 gene provides a useful model system to analyze this process. sod2 is near the telomere of chromosome I and encodes a plasma membrane Na(+)(Li(+))/H(+) antiporter. When sod2 is amplified, S. pombe survives otherwise lethal concentrations of LiCl, and >90% of the amplified sod2 genes are found in 180- and 225-kilobase (kb) linear amplicons. The sequence of the novel joint of the 180-kb amplicon indicates that it is formed by recombination between homologous regions near the telomeres of the long arm of chromosome I and the short arm of chromosome II. The 225-kb amplicon, isolated three times more frequently than the 180-kb amplicon, is a palindrome derived from a region near the telomere of chromosome I. The center of symmetry of this palindrome contains an inverted repeat consisting of two identical 134-base pair sequences separated by a 290-base pair spacer. LiCl-resistant mutants arise 200-600 times more frequently in strains deficient for topoisomerases or DNA ligase activity than in wild-type strains, but the mutant cells contain the same amplicons. These data suggest that amplicon formation may begin with DNA lesions such as breaks. In the case of the 225-kb amplicon, the breaks may lead to a hairpin structure, which is then replicated to form a double-stranded linear amplicon, or to a cruciform structure, which is then resolved to yield the same amplicon.