Flexi Says: Evidence indicates that eukaryotic chloroplasts (and mitochondria) originated as prokaryotes that lived inside other, larger prokaryotic cells. This hypothesis is called the endosymbiotic hypothesis or the Theory of Endosymbiosis. Both chloroplasts and mitochondria contain DNA that is distinct from that of the cell nucleus, but similar to the DNA of bacteria. New chloroplasts are made inside plant and algae cells through a process similar to binary fission.