Studies of the biology of Borrelia burgdorferi and the pathogenesis of Lyme disease are severely limited by the current lack of genetic tools. As an initial step toward facile genetic manipulation of this pathogenic spirochete, we have investigated gene inactivation by allelic exchange using a mutated borrelial gyrB gene that confers resistance to the antibiotic coumermycin A, as a selectable marker. We have transformed B. burgdorferi by electroporation with a linear fragment of DNA in which this selectable marker was flanked by sequences from a native borrelial 26-kb circular plasmid. We have identified coumermycin A1-resistant transformants in which gyrB had interrupted the targeted site on the 26-kb plasmid via homologous recombination with the flanking sequences. Antibiotic resistance conferred by the mutated gyrB gene on the plasmid is dominant, and transformed spirochetes carrying this plasmid do not contain any unaltered copies of the plasmid. Coumermycin A1 resistance can be transferred to naive B. burgdorferi by transformation with borrelial plasmid DNA from the initial transformants. This work represents the first example of a directed mutation in B. burgdorferi whereby a large segment of heterologous DNA (gyrB) has been inserted via homologous recombination with flanking sequences, thus demonstrating the feasibility of specific gene inactivation by allelic exchange.