Transpositions of segments of R factor (antibiotic resistance plasmids) to bacteriophage lambda have been selected and characterized. Cells of Escherichia coli harboring R factors that determine kanamycin resistance were infected with phage lambda, and lambdakan transducing lines were obtained. Each of the three examined is unusual when compared to lambda transducing phages containing E. coli chromosomal genes: the kan insertions (a) occur at several sites, each well removed from the integration region POP', (b) are not associated with deletion of lambda phage DNA, and (c) are separable from the lambda genome during transduction or during lytic growth. Two insertions from the same R factor contain 1.5 kilobase sequences repeated in inverted order. The properties of the lambdakan phage suggest that R factors contain systems capable of mediating genetic exchange in the absence of extensive DNA homology. It is suggested that such systems of exchange may have played important roles in R factor evolution.