Transduction involves the exchange of DNA between bacteria using bacterial viruses (bacteriophage) as an intermediate. There are two types of transduction, generalized transduction and specialized transduction, that differ in their mechanism and in the DNA that gets transferred. Before we can address these processes, however, we need to understand the life cycle of a bacteriophage.
When a phage infects a bacterial cell, it injects its DNA into the cell. The viral DNA is replicated numerous times, and viral genes are expressed, producing the proteins that make up the viral capsid (or protein coat) and nucleases that digest the host genome into fragments. The newly replicated viral DNA molecules are packaged into viral capsids, and the bacterial cell is lysed (burst, and therefore killed), releasing hundreds of viral progeny, which then go on to infect other cells.
Generalized Transduction
Sometimes, during bacteriophage replication, a mistake is made, and a fragment of the host DNA gets packaged into a viral capsid. The resulting phage would be able to infect another cell, but it would not have any viral genes, so it would not be able to replicate. The cell infected by this phage would survive, and would have an extra piece of bacterial DNA present, which could undergo recombination with the host chromosome, and perhaps cause a gene conversion event. Because it is a random fragment that gets packaged into the viral capsid, any segment of the bacterial DNA can be transferred this way (hence the name 'generalized').
Specialized Transduction
Specialized transduction occurs only with certain types of bacteriophage, such as phage lambda. Lambda has the ability to establish what is called a lysogenic infection in a bacterial cell. In a lysogenic infection, the viral DNA becomes incorporated into the host chromosome, much as the F factor did in Hfr cells. In a lysogenic infection by lambda, the DNA integrates into a very specific spot in the host chromosome. The integrated viral DNA can remain integrated for long periods of time, without disturbing the cell. Under the appropriate conditions (the regulation of this is very complex, so don't worry about it), the viral DNA will excise itself from the chromosome, and enter the lytic phase, in which the virus replicates just as described above. The cell gets lysed, and new bacteriophage particles are released to infect other cells. As with excision of the F factor (when Hfr cells become F'), sometimes the excision of lambda is sloppy, and some bacteria DNA is excised along with it. When the resulting virus infects another cell, it will pass that bacterial DNA into the cell, along with its own DNA. If the infected cell survives (it can happen; there are bacterial defenses against viral infection), it will contain a new piece of bacterial DNA, which can undergo recombination and possibly cause gene conversion. Because the viral DNA integrates into a specific location, when it excises, the bacterial DNA removed with it will be the same in all cases. Therefore, the DNA transferred to the second cell will be the same segment of the bacterial chromosome. This is why this process is called 'specialized' transduction.
Bacterial Recombination: Summary of Key Points