What is the process called when bacteria take up free DNA from their environment?

The process in which bacteria take up free DNA from their environment is called transformation.

Transformation is a form of horizontal gene transfer: DNA moves between organisms rather than being passed from parent cell to offspring. A bacterium must first become competent, meaning it develops the cellular machinery needed to bind and import DNA from its surroundings. Some species become competent naturally in response to conditions such as crowding or nutrient stress, while researchers can induce competence in the laboratory.

Once inside the cell, imported DNA may be incorporated into the bacterial chromosome through homologous recombination. It can then provide a new trait, such as altered metabolism or resistance to an antibiotic, although DNA uptake does not guarantee that a lasting trait will result.

The main mix-up is with the other two classic gene-transfer mechanisms. Transduction uses a bacteriophage to carry DNA between bacteria, whereas conjugation transfers DNA through direct cell-to-cell contact, often via a pilus. Binary fission is different altogether: it is bacterial reproduction, not DNA acquisition from the environment.