Sequence determination of the chloroplast clpP gene from two distantly related Chlamydomonas species (C. reinhardtii and C. eugametos) revealed the presence of translated large insertion sequences (IS1 and IS2) that divide the clpP gene into two or three sequence domains (SDs) and are not found in homologous genes in other organisms. These insertion sequences do not resemble RNA introns, and are not spliced out at the mRNA level. Instead, each insertion sequence forms a continuous open reading frame with its upstream and downstream sequence domains. IS1 specifies a potential polypeptide sequence of 286 and 318 amino acid residues in C. reinhardtii and C. eugametos, respectively. IS2 encodes a 456 amino acid polypeptide and is present only in C. eugametos. The two Chlamydomonas IS1 sequences show substantial similarity; however, there is no significant sequence similarity either between IS1 and IS2 or between these insertion sequences and any other known protein coding sequences. The C. reinhardtii clpP gene was further shown to be essential for cell growth, as demonstrated through targeted gene disruption by particle gun-mediated chloroplast transformation. Only heteroplasmic transformants could be obtained, even under mixotrophic growth conditions. The heteroplasmic transformants were stable only under selection pressure for the disrupted clpP, rapidly segregated into wild-type cells when the selection pressure was removed, and grew significantly more slowly than wild-type cells under phototrophic conditions.