The Ser-139 phosphorylated form of replacement histone H2AX (gamma-H2AX) is induced within large chromatin domains by double-strand DNA breaks (DSBs) in mammalian chromosomes. This modification is known to be important for the maintenance of chromosome stability. However, the mechanism of gamma-H2AX formation at DSBs and its subsequent elimination during DSB repair remains unknown. gamma-H2AX formation and elimination could occur by direct phosphorylation and dephosphorylation of H2AX in situ in the chromatin. Alternatively, H2AX molecules could be phosphorylated freely in the nucleus, diffuse into chromatin regions containing DSBs and then diffuse out after DNA repair. In this study we show that free histone H2AX can be efficiently phosphorylated in vitro by nuclear extracts and that free gamma-H2AX can be dephosphorylated in vitro by the mammalian protein phosphatase 1-alpha. We made N-terminal fusion constructs of H2AX with green fluorescent protein (GFP) and studied their diffusional mobility in transient and stable cell transfections. In the absence or presence of DSBs, only a small fraction of GFP-H2AX is redistributed after photobleaching, indicating that in vivo this histone is essentially immobile in chromatin. This suggests that gamma-H2AX formation in chromatin is unlikely to occur by diffusion of free histone and gamma-H2AX dephosphorylation may involve the mammalian protein phosphatase 1alpha.