Transposons are DNA sequences that encode functions that promote their movement to new locations in the genome. If unregulated, such movement could potentially insert additional DNA into genes, thereby disrupting gene expression and compromising an organism's viability. Transposable elements are classified by their transposition mechanisms and by the transposases that mediate their movement. The mechanism of movement of the eukaryotic hAT superfamily elements was previously unknown, but the divergent sequence of hAT transposases from other elements suggested that these elements might use a distinct mechanism. Here we have analysed transposition of the insect hAT element Hermes in vitro. Like other transposons, Hermes excises from DNA via double-strand breaks between the donor-site DNA and the transposon ends, and the newly exposed transposon ends join to the target DNA. Interestingly, the ends of the donor double-strand breaks form hairpin intermediates, as observed during V(D)J recombination, the process which underlies the combinatorial formation of antigen receptor genes. Significant similarities exist in the catalytic amino acids of Hermes transposase, the V(D)J recombinase RAG, and retroviral integrase superfamily transposases, thereby linking the movement of transposable elements and V(D)J recombination.