Insertions in bacteriophage Mu DNA have been identified. These insertions are responsible for at least seven X mutations, all of which eliminate essential Mu functions. The insertions are about 800 base pairs long and are located to the left of the cleavage site of restriction endonuclease EcoRI, near the immunity end of Mu DNA. We have found that such insertions cause a reduction in the length of nonhomologous terminal sequences which are seen as split ends in denatured and renatured Mu DNA molecules. These heterogeneous sequences apparently arise from packaging of host DNA from maturation precursors in which Mu and host DNA are covalently linked. We infer that a single Mu genome length is too short to be cut during morphogenesis, and thus some host DNA is packaged into mature virions. Since the insertions increase the length of Mu DNA, they decrease the amount of host DNA needed for packaging.