In February 2004 a highly pathogenic avian influenza (HPAI) outbreak erupted in British Columbia. Investigations indicated that the responsible HPAI H7N3 virus emerged suddenly from a low pathogenic precursor. Analysis of the haemagglutinin (HA) genes of the low and high pathogenic viruses isolated from the index farm revealed the only difference to be a 21 nt insert at the HA cleavage site of the highly pathogenic avian influenza virus. It was deduced that this insert most probably arose as a result of non-homologous recombination between the HA and matrix genes of the same virus. Over the course of the outbreak, a total of 37 isolates with, and 3 isolates without inserts were characterized. The events described here appear very similar to those which occurred in Chile in 2002 where the virulence shift of another H7N3 virus was attributed to non-homologous recombination between the HA and nucleoprotein genes.