The inverted repeats (IRs) of the insertion element IS903 are composed of two functional regions. An inner region, consisting of basepairs 6-18, is the transposase binding site. The outer region (positions 1-3) is not contacted during initial transposase binding, but is essential for efficient transposition. We have examined the interaction of the IR with the transposase by isolating transposase suppressors of IR mutations. These suppressors define two patches within the N-terminus of the protein. One class of suppressors, which rescued the majority of outer IR mutants tested, contained mutations in close proximity to an aspartate residue (D121) believed to form part of the catalytic DDE motif, suggesting that their suppressive effect is in the positioning of the catalytic site at the terminus of the transposon. The hypertransposition phenotype of mutant VA119 is also consistent with this hypothesis. The second class was more allele specific and preferentially suppressed a mutation at position 3 of the IR. Finally, we showed that mutations at the termini of the IR elevate the frequency of cointegrate formation by IS903. Other outer IR mutations did not have this effect. These data are consistent with the terminal bases of the transposon playing multiple and distinct roles in transposition.