The Escherichia coli system of Cairns and Foster employs a lac frameshift mutation that reverts rarely (10-9/cell/division) during unrestricted growth. However, when 108 cells are plated on lactose medium, the nongrowing lawn produces ∼50 Lac+ revertant colonies that accumulate linearly with time over 5 days. Revertants carry very few associated mutations. This behavior has been attributed to an evolved mechanism ("adaptive mutation" or "stress-induced mutagenesis") that responds to starvation by preferentially creating mutations that improve growth. We describe an alternative model, "selective inbreeding," in which natural selection acts during intercellular transfer of the plasmid that carries the mutant lac allele and the dinB gene for an error-prone polymerase. Revertant genome sequences show that the plasmid is more intensely mutagenized than the chromosome. Revertants vary widely in their number of plasmid and chromosomal mutations. Plasmid mutations are distributed evenly, but chromosomal mutations are focused near the replication origin. Rare, heavily mutagenized, revertants have acquired a plasmid tra mutation that eliminates conjugation ability. These findings support the new model, in which revertants are initiated by rare pre-existing cells (105) with many copies of the F'lac plasmid. These cells divide under selection, producing daughters that mate. Recombination between donor and recipient plasmids initiates rolling-circle plasmid over-replication, causing a mutagenic elevation of DinB level. A lac+ reversion event starts chromosome replication and mutagenesis by accumulated DinB. After reversion, plasmid transfer moves the revertant lac+ allele into an unmutagenized cell, and away from associated mutations. Thus, natural selection explains why mutagenesis appears stress-induced and directed.