The capacity of eukaryotic topoisomerase I to catalyze intra- and intermolecular DNA strand transfer via a two-step cleavage/ligation reaction was investigated by use of purified enzyme and defined DNA substrates. Topoisomerase I-mediated cleavage requires separate interaction with a duplex region encompassing the cleavage site (region A) and a duplex region located on the side holding the 5'-OH end generated by cleavage (region B). Cleaved topoisomerase I-DNA complexes containing enzyme covalently attached at internal and terminal positions were employed to characterize the intra- and intermolecular ligation reactions. Enzyme attached covalently at an internal position of a partially single-stranded DNA molecule is able to catalyze ligation of a complementary dinucleotide within region A in the absence of interaction with region B. Moreover, the dinucleotide confines the minimal DNA acceptor for intramolecular ligation. Topoisomerase I attached covalently to DNA at a terminal position can ligate the cleaved strand to heterologous duplex DNA regardless of sequence, whereas ligation does not proceed with single-stranded DNA. When these features are considered together with the observation that intermolecular ligation is inhibited by 1 M NaCl, it suggests that the reaction requires bipartite DNA interaction. A model is proposed that relates the bipartite DNA binding of eukaryotic topoisomerase I to the catalytic functions.