Adeno-associated virus (AAV) establishes latency in infected cells by integrating into the cellular genome, with a high preference for a unique region, called AAVS1, of the human chromosome 19. The AAV proteins Rep78 and -68 are postulated to initiate the site-specific integration process by binding to a Rep binding site (RBS) in AAVS1. We provide further evidence to corroborate this model by demonstrating that the AAVS1 RBS in human cell lines is located near a DNase I hypersensitive "open" chromatin region and therefore is potentially easily accessible to Rep proteins. This open conformation is maintained in transgenic rats which carry an AAVS1 3. 5-kb DNA fragment and are proficient for Rep-mediated site-specific integration. Interestingly, the core of the DNAse I hypersensitive site in AAVS1 corresponds to a sequence displaying transcriptional enhancer-like properties, suggesting that AAVS1 constitutes a transcription-competent environment. The implications of our findings for AAV physiology and gene therapy are discussed.