The xeroderma pigmentosum (XP) variant (XPV) is a form of XP that has normal excision repair but shows defective DNA replication after UV irradiation. In developing various transformed fibroblast cell lines from these patients, we have found that there are significant phenotypic changes in transformed cells that seem to correlate with inactivation of p53. After transformation with SV40, XPV cell lines are only slightly UV sensitive, like their primary counterparts, but their sensitization with caffeine and the induction of sister chromatid exchanges (SCEs) by UV irradiation are greatly enhanced. After transformation by HPV16 E7, which targets the retinoblastoma cell cycle regulatory gene, there is no change in the UV sensitivity of XPV cells; but, when transformed by HPV16 E6 or E6 and E7 combined, there is a large increase in UV sensitivity and in the induction of SCEs. These changes are not associated with any detectable changes in the reactivation of an externally irradiated luciferase expression vector, the excision of cyclobutane pyrimidine dimers from bulk DNA, or unscheduled DNA synthesis and, therefore, do not involve excision repair. We suggest that if SCEs represent homologous recombination between sister chromatids, then in the absence of p53 function, the DNA chain arrest typical of UV-damaged XPV cells initiates strand exchange during recovery. In untransformed cells with normal p53, the preferred mode of recovery would then be replication bypass. The symptoms of elevated solar carcinogenesis in XPV patients may, therefore, be associated with increased genomic instability in cells of the skin in which p53 is inactivated by UV-induced mutations.