The type I topoisomerase from rat cells produces true catenanes from circular SV40 DNA in a reaction which is dependent on the presence of a single-strand break in at least one member of a pair of reacting molecules. The role of the single-strand break in the reaction was examined. Molecules containing a nick with a 3'-hydroxyl and 5'-phosphate or a nick with a 3'-phosphate and 5'-hydroxyl and molecules with single-stranded gaps were all found to be equally effective in the catenation reaction. It was found that the enzyme could, at a low frequency, break DNA by acting opposite a pre-existing single-strand break. Thus, incubation of nicked circular DNA in the presence of the topoisomerase, polynucleotide kinase, and [gamma-32P]ATP led to the production of a low level of labeled linear molecules containing covalently attached protein. Nicked linear molecules treated with topoisomerase in the absence of polynucleotide kinase generated fragments of sizes consistent with breakage in the opposite strand near the pre-existing nick. Based on these results, we propose that the catenation reaction may involve the transient production of linear intermediates by the action of the topoisomerase opposite a pre-existing nick in the DNA. Rejoining of the two ends by the enzyme could lead to the interlocking of two or more circular DNAs. In addition, these results suggest a possible role for the type I topoisomerase in illegitimate recombination.