Successful segregation of circular chromosomes in Escherichia coli requires that dimeric replicons, produced by homologous recombination, are converted to monomers prior to cell division. The Xer site-specific recombination system uses two related tyrosine recombinases, XerC and XerD, to catalyze resolution of circular dimers at the chromosomal site, dif. A 33-base pair DNA fragment containing the 28-base pair minimal dif site is sufficient for the recombinases to mediate both inter- and intramolecular site-specific recombination in vivo. We show that Xer-mediated intermolecular recombination in vitro between nicked linear dif "suicide" substrates and supercoiled plasmid DNA containing dif is initiated by XerC. Furthermore, on the appropriate substrate, the nicked Holliday junction intermediate formed by XerC is converted to a linear product by a subsequent single XerD-mediated strand exchange. We also demonstrate that a XerC homologue from Pseudomonas aeruginosa stimulates strand cleavage by XerD on a nicked linear substrate and promotes initiation of strand exchange by XerD in an intermolecular reaction between linear and supercoiled DNA, thereby reversing the normal order of strand exchanges.