The efficiency with which linearized plasmid DNA can transform competent Escherichia coli can be significantly increased by use of the Cre-lox site-specific recombination system of phage P1. Linear plasmid molecules containing directly repeated loxP sites (lox2 plasmids) are cyclized in Cre+ E. coli strains after introduction either by transformation or by mini-Mu transduction. Exonuclease V activity of the RecBC enzyme inhibits efficient cyclization of linearized lox2 plasmids after transformation. By use of E. coli mutants which lack exonuclease V activity, Cre-mediated cyclization results in transformation efficiencies for linearized lox2 plasmids identical to those obtained with covalently closed circular plasmid DNA. Moreover, Cre+ E. coli recBC strains allow the efficient recovery of lox2 plasmids integrated within large linear DNA molecules such as the 150-kb genome of pseudorabies virus.