The capsule genes of Streptococcus pneumoniae have a cassette-like organization in which the type-specific biosynthetic genes are flanked by genes shared among the different capsular serotypes. This general organization has been identified in the capsule loci of all serotypes analyzed to date, but significant differences that may help explain novel capsule type formation are beginning to emerge. In particular, analysis of the type 3 locus has revealed its most striking feature to be a preponderance of partial genes that have homology to sequences involved in polysaccharide biosynthesis and transposition. The predicted proteins of cps3M, the most downstream type 3-specific gene, and tnpA and plpA, the non-type-specific flanking sequences downstream of cps3M, have homologies with phosphomutases, transposases, and peptide permeases, respectively. All three of these sequences are truncated when compared to their respective homologs. Mutation and transcription analyses of these partial sequences showed that none of these sequences is essential for type 3 polysaccharide synthesis but that all are transcribed. Partial sequences were also identified in the region upstream of the type 3-specific genes. The type 3 locus structure is conserved among independent type 3 isolates but similar deletions are not apparent in the common, non-type-specific flanking sequences in other capsular types. A role for transposition-mediated events in the generation of the type 3 locus, and possibly other pneumococcal capsule loci, is suggested by these findings.