The ability of topoisomerase II to mediate a number of DNA rearrangements was examined at the molecular level. For this purpose a new type of defined donor and acceptor substrate have been developed, and used for studies of the intramolecular and intermolecular DNA ligation reactions of topoisomerase II. Intramolecular ligation occurred only to single-stranded acceptor molecules with the ability to base-pair to the donor substrate, while the intermolecular ligation reaction displayed a strong preference for double-stranded acceptor molecules with a short four base, single-stranded region. The efficiency of the intermolecular ligation reaction was highly dependent on base-pairing between the acceptor molecule and the DNA donor cleaved by topoisomerase II. Thus, acceptor molecules containing a blunt end or a four base 5' overhang without base-pairing ability ligated with an approximately eightfold reduced efficiency, as compared with the base-pairing control. Experiments demonstrated that the enzyme can ligate DNA molecules, where nucleotides were either removed or inserted in the employed acceptor molecules. The results indicate that topoisomerase II might be responsible for similar rearrangements in vivo, since gapped and nicked DNA structures appear as intermediates in processes such as replication and repair. The reaction is, however, likely to be constrained by the requirement of base-pairing for ligation.