Transcription of isolated repeat units of D. melanogaster 5S DNA in a Drosophila KcO cell extract revealed three types of template activities. 5SI DNA encodes the known 5S rRNA of D. melanogaster and has a relatively high transcription efficiency. 5SII DNA is identical to 5SI DNA except for a two-nucleotide deletion at 5S rRNA positions 28 and 29; the efficiency of transcription is approximately 40% that of 5SI DNA and because of the deletion, the primary transcript is two nucleotides shorter. 5SIII DNA does not support in vitro transcription (less than 2% 5SI DNA), but has the same sequence as 5SI DNA except for a single G to A transition at position 86. This is the first reported point-mutation in a 5S RNA gene resulting in loss of transcription function. Of approximately 23 5S rRNA gene copies in a cloned 5S DNA sub-cluster (p12D1) 19 appear to be of the transcriptionally inactive 5SIII DNA type.