Recombinant adeno-associated virus (AAV) type 2 has attracted attention because it appears to have the potential to serve as a vector for human gene therapy. An interesting feature of wild-type AAV is its site-specific integration into AAVS1, a defined locus on chromosome 19. This reaction requires the presence of two viral elements: inverted terminal repeats and Rep78/68. Accordingly, current AAV vectors lacking the rep gene lack the capacity for site-specific integration. In this report, we describe the use of Cre-loxP recombination in a novel system for the regulated, transient expression of Rep78, which is potentially cytotoxic when synthesized constitutively. We constructed a plasmid in which the p5 promoter was situated downstream of the rep coding sequence; in this configuration, rep expression is silent. However, Cre circularizes the rep expression unit, directly joining the p5 promoter to the 5' end of the rep78 coding sequence, resulting in expression of Rep78. Such structural and functional changes were confirmed by detailed molecular analysis. A key feature of this system is that Rep expression was terminated when the circular molecule was linearized and integrated into the chromosome. Using this regulated expression system, we attempted site-specific integration of AAV vector plasmids. A PCR-based assay and analysis of fluorescence in situ hybridization showed that the AAV vector sequence was integrated into chromosome 19. Sequence analysis also confirmed that transient expression of Rep78 was sufficient for site-specific integration at the AAVS1 locus, as is observed with integration of wild-type AAV.