It has previously been shown that the PAN promoter from Mycobacterium paratuberculosis can be used as a DNA probe to identify an RFLP between wild-type Mycobacterium bovis and the vaccine strain Mycobacterium bovis BCG. To investigate the genetic basis of this phenomenon, DNA fragments from a New Zealand M. bovis cattle strain and M. bovis BCG Pasteur, containing the PAN-binding region, were isolated from gene libraries, sequenced and characterized. Sequence analysis and comparison with database sequences showed that the PAN region in M. bovis, M. bovis BCG and Mycobacterium tuberculosis is identical and shares 70% similarity to the PAN sequence from M. paratuberculosis. The Shine-Dalgarno sequence and the -10 and -35 promoter regions are conserved between the different species. Analysis of the flanking sequences of the PAN region revealed that less than 1 kb downstream of PAN is a 2405 bp fragment that is present in M. bovis BCG but absent in the M. bovis wild-type strain. The distribution of the 2405 bp fragment in members of the M. tuberculosis complex was investigated and found to be present in 70 out of 70 M. tuberculosis strains, and 7 out of 7 M. bovis BCG daughter strains, 2 out of 2 Mycobacterium africanum strains, 2 out of 2 Mycobacterium microti strains and 7 out of 25 M. bovis strains. This is the first report of a genetic region of M. bovis BCG that is not universally present in M. bovis strains. The fragment does not appear to be present in any mycobacterial species outside the M. tuberculosis complex. It does not possess any characteristics of known transposable elements and the flanking sequences do not have any obvious features to suggest a deletion mechanism. The genetic location of this region is close to the 3' end of the RD1 region of M. bovis and M. tuberculosis. The polymorphic nature of this locus in M. bovis will provide an additional genetic marker for strain differentiation.