The deletion of nine residues from the C-terminus of the bacterial chloramphenicol acetyltransferase (CAT) results in deposition of the mutant protein in cytoplasmic inclusion bodies and loss of chloramphenicol resistance in Escherichia coil. This folding defect is relieved by C-terminal fusion of the polypeptide with as few as two residues. Based on these observations, efficient positive selection for the cloning of DNA fragments has been demonstrated. The cloning vector encodes a C-terminally truncated CAT protein. Restriction sites in front of the stop codon allow the insertion of target DNA, resulting in the production of properly folded CAT fusion proteins and regained chloramphenicol resistance. The positive selection of recombinants is accomplished by growth of transformants on chloramphenicol-containing agar plates. The method appears particularly convenient for the cloning of DNA fragments amplified by the PCR because minimal information to restore CAT folding can be included in the primers. The cloning of random sequences shows that the folding defect can be relieved by fusion to a wide variety of peptides, providing great flexibility to the positive selection system, This vector may also contribute to the determination of the role of the C-terminus in CAT folding.