The Escherichia coli insertion sequence, IS2, is a member of the IS3 family of bacterial transposable elements. Its transposase is a fusion protein, OrfAB, made by a programmed -1 translational frameshift near to the end of orfA and just after the start of orfB. We have characterized two major products of IS2 intramolecular transposition, which accumulate in cells that express the IS2 OrfAB fusion protein at elevated levels. The more abundant product is a minicircle composed of the complete IS2 with just a single basepair (occasionally 2bp) separating the two IS ends. In all cases, this basepair is derived from the vector sequence immediately adjacent to the left IS2 end (IRL). The second product is a figure-eight molecule that contains all the IS2 and vector sequences present in the parental plasmid. One DNA strand contains the parental sequences unrearranged. The other contains a single-stranded version of the minicircle junction--the precise 3' end of IRR has been cleaved and joined to a target just outside the 5' end of IRL; the remaining vector sequences have a free 5' end, derived from cleavage at the 3' end of IRR, and a free 3' end, released upon cleavage of the target site adjacent to IRL. We propose that figure-eight molecules are the precursor to IS2 minicircles and that the formation of these two products is the initial step in IS2 intermolecular transposition. This proposed transposition pathway provides a means for a transposase that can cleave only one strand at each IS end to produce simple insertions and avoid forming co-integrates.