Persistent/latent viral infections of insect cells are a prominent though poorly understood phenomenon. In this study, the long-term association between the Hz-1 virus and insect host cells, conventionally referred to as persistent viral infection, is described. With the aid of a newly developed fluorescent cell-labeling system, we found that productive viral replication occurs by spontaneous viral reactivation in fewer than 0.2% of persistently infected cell lines over a 5-day period. Once viral reactivation takes place, the host cell dies. The persistently infected cells contain various amounts of viral DNA, and, in an extreme case, up to 16% of the total DNA isolated from infected cells could be of viral origin. Both pulsed-field gel electrophoresis and in situ hybridization experiments showed that some of these viral DNA molecules are inserted into the host chromosomes but that the rest of viral DNA copies are free from host chromosomes. Thus, Hz-1 virus is the first nonretroviral insect virus known to insert its genome into the host chromosome during the infection process. These data also suggest that the previously described persistent infection of Hz-1 virus in insect cells should be more accurately referred to as latent viral infection.