DNA loop heterologies are products of normal DNA metabolism and can lead to severe genomic instability if unrepaired. To understand how human cells process DNA loop structures, a set of circular heteroduplexes containing a 30-nucleotide loop were constructed and tested for repair in vitro by human cell nuclear extracts. We demonstrate here that, in addition to the previously identified 5' nick-directed loop repair pathway (Littman, S. J., Fang, W. H., and Modrich, P. (1999) J. Biol. Chem. 274, 7474-7481), human cells can process large DNA loop heterologies in a loop-directed manner. The loop-directed repair specifically removes the loop structure and occurs only in the looped strand, and appears to require limited DNA synthesis. Like the nick-directed loop repair, the loop-directed repair is independent of many known DNA repair pathways, including DNA mismatch repair and nucleotide excision repair. In addition, our data also suggest that an aphidicolin-sensitive DNA polymerase is involved in the excision step of the nick-directed loop repair pathway.