We describe the molecular and biological properties of BK virus (BKV)-IR, a new BKV variant isolated from a human tumor of pancreatic islets. BKV-IR bears a 253-base-pair (bp) deletion and an 80-bp insertion in the early region of the genome. The deletion abolishes the expression of small-t antigen. The inserted sequences, grouped in four clusters, produce rearrangements in the first and second enhancer elements. They are bound by 12-bp direct repeats and could form a 217-base stem-loop structure suggestive of an insertion sequence. As compared with wild-type BKV, BKV-IR transformed hamster cells with a reduced efficiency and induced ependymomas in hamsters at a lower frequency and with a longer latency period. Tumors induced by BKV-IR, however, showed features of higher malignancy. The possible role of the insertion sequence-like element in transformation by BKV-IR is discussed.