Frameshift mutations provide recognized mechanisms for changing the coding potential of an organism. Here, multiple frameshifts are identified in repetitive sequences within an Epstein-Barr virus unspliced early gene, LF3, which is associated with the viral replicative cycle and also transcriptionally expressed in many virally associated tumors. On the DNA strand encoding LF3, there are three open reading frames, only one of which contains an initiation codon. Most (>95%) of the gene consists of numerous (>20, varying with cell source) GC-rich copies of a 102-bp direct repeat (called IR 4) flanked by small unique sequences. LF3 may express a protein if its initiation and termination codons reside in the same reading frame, but this is not always the case. Frameshifting events, occurring in short runs of pyrimidines (mainly C residues) in the repeats, give rise to mutations which may provide a mechanism for escape of an LF3 function from host surveillance. Sequence studies link these frameshifts to DNA replication errors. Notably, the number of sites in LF3 at which such mutations can occur permits a very large amount of diversity in this gene. Our data also suggest a second degeneracy mechanism within the protein itself, which influences its stability and may reflect a host defense mechanism. LF3 thus provides a potentially important model for studying the quest for supremacy between a virus and its host.