Chromosomal rearrangements, uniformly represented by very large deletions, were stimulated upon transiently exposing Escherichia coli cells with a defective lambda prophage to about 18% (v/v) ethanol. It was shown that the ethanol treatment induced deletion formation rather than enriching for ethanol-tolerant cells. The deletions in 435 mutants were mapped to 26 groups. Ethanol treatment changed the spectrum of deletions relative to those arising spontaneously, and stimulated the formation of deletions with endpoints in E. coli DNA flanking the lambda fragment. The promotion of deletion formation by ethanol involves the joining of distant, nonhomologous linear DNA segments, which can be considered an illegitimate recombination event; however, activity of the E. coli recA gene product was also required. Although spontaneous deletions arose in comparable cells defective for recA, the incidence of deletion formation in recA cells was not altered by ethanol. It is proposed that ethanol stimulates chromosomal rearrangements involving two oppositely oriented replication forks, since the localized deletions commonly removed or inactivated the chromosomal segment including the bidirectional lambda origin of replication. The results imply a novel mutagenic process induced by an agent that does not act directly on DNA.