Vaccinia type I DNA topoisomerase exhibits a strong site-specific ribonuclease activity when provided a DNA substrate that contains a single uridine ribonucleotide within a duplex DNA containing the sequence 5' CCCTU 3'. The reaction involves two steps: attack of the active site tyrosine nucleophile of topo I at the 3' phosphodiester of the uridine nucleotide to generate a covalent enzyme-DNA adduct, followed by nucleophilic attack of the uridine 2'-hydroxyl to release the covalently tethered enzyme. Here we report the first continuous spectroscopic assay for topoisomerase that allows monitoring of the ribonuclease reaction under multiple-turnover conditions. The assay is especially robust for high-throughput screening applications because sensitive molecular beacon technology is utilized, and the topoisomerase is released during the reaction to allow turnover of multiple substrate molecules by a single molecule of enzyme. Direct computer simulation of the fluorescence time courses was used to obtain the rate constants for substrate binding and release, covalent complex formation, and formation of the 2',3'-cyclic phosphodiester product of the ribonuclease reaction. The assay allowed rapid screening of a 500 member chemical library from which several new inhibitors of topo I were identified with IC(50) values in the range of 2-100 microM. Three of the most potent hits from the high-throughput screening were also found to inhibit plasmid supercoil relaxation by the enzyme, establishing the utility of the assay in identifying inhibitors of the biologically relevant DNA relaxation reaction. One of the most potent inhibitors of the vaccinia enzyme, 3-benzo[1,3]dioxol-5-yl-2-oxoproprionic acid, did not inhibit the closely related human enzyme. The inhibitory mechanism of this compound is unique and involves a step required for recycling the enzyme for steady-state turnover.