We have developed an instrument for micromanipulation of single DNA molecules end labeled with 3-microm-diameter paramagnetic particles. A small, permanent magnet that can be moved as close as 10 microm to the particle being manipulated can generate forces in excess of 200 pN, significantly larger than obtained in other recent "magnetic-tweezer" studies. Our instrument generates these forces in the focal plane of a microscope objective, allowing straightforward real-time observation of molecule extension with a position resolution of approximately 30 nm. We show how our magnetic manipulation system can be combined with manipulation and force measurement using glass micropipettes to allow rapid switching between measurements in fixed-force and fixed-extension ensembles. We demonstrate the use of our system to study formation of DNA loops by an enzyme which strongly binds two copies of a specific 6-base-pair sequence.