We report that the bacterial transposon Tn7 selects targets by recognizing features associated with DNA replication using the transposon-encoded DNA-binding protein TnsE. We show that Tn7 transposition directed by TnsE occurs in one orientation with respect to chromosomal DNA replication, indicating that a structure or complex involved in DNA replication is likely to be a critical determinant of TnsE insertion. We find that mutant TnsE proteins that allow higher levels of transposition also bind DNA better than the wild-type protein. The increased binding affinity displayed by the TnsE high-activity mutants indicates that DNA binding is relevant to transposition activity and suggests that TnsE interacts directly with target DNAs. In vitro, TnsE interacts preferentially with certain DNA structures, indicating a mechanism for the TnsE-mediated orientation and insertion preference. The pattern of TnsE-mediated insertion events around the Escherichia coli chromosome provides insight into how DNA replication forks proceed in vivo.