High levels of expression of the cry1Ac gene from Bacillus thuringiensis cannot be routinely achieved in transgenic plants despite modifications made in the gene to improve its expression. This has been attributed to the instability of the transcript in a few reports. In the present study, based on the genetic transformation of cotton and tobacco, we show that the expression of the Cry1Ac endotoxin has detrimental effects on both the in vitro and in vivo growth and development of transgenic plants. A number of experiments on developing transgenics in cotton with different versions of cry1Ac gene showed that the majority of the plants did not express any Cry1Ac protein. Based on Southern blot analysis, it was also observed that a substantial number of lines did not contain the cry1Ac gene cassette although they contained the marker gene nptII. More significantly, all the lines that showed appreciable levels of expression were found to be phenotypically abnormal. Experiments on transformation of tobacco with different constructs expressing the cry1Ac gene showed that in vitro regeneration was inhibited by the encoded protein. Further, out of a total of 145 independent events generated with the different cry1Ac gene constructs in tobacco, only 21 showed expression of the Cry1Ac protein, confirming observations made in cotton that regenerants that express high levels of the Cry1Ac protein are selected against during regeneration of transformed events. This problem was circumvented by targeting the Cry1Ac protein to the chloroplast, which also significantly improved the expression of the protein.