A complete analysis of the entire genome of the temperate lactococcal bacteriophage TP901-1 has been performed and the function of 21 of 56 TP901-1-encoded ORFs has been assigned. This knowledge has been used to propose 10 functional modules each responsible for specific functions during bacteriophage TP901-1 proliferation. Short regions of microhomology in intergenic regions present in several lactococcal bacteriophages and chromosomal fragments of Lactococcus lactis are suggested to be points of exchange of genetic material through homologous recombination. Our results indicate that TP901-1 may have evolved by homologous recombination between the host chromosome and a mother phage and support the observation that phage remnants as well as prophages located in the Lactococcus chromosome contribute significantly to bacteriophage evolution. Some proteins encoded in the early transcribed region of the TP901-1 genome were more homologous to proteins encoded by phages infecting gram-positive hosts other than L. lactis. This protein homology argues for the occurrence of horizontal genetic exchange among these bacteriophages and indicates that they have access to a common gene pool.