The activity of the endogenous DNA topoisomerase type I (EC 5.99.1.2) can be quantified in situ by determining how efficiently the enzyme is trapped in a covalent complex with DNA upon lysis of nuclei with detergents. In this way, we can measure relative levels of topoisomerase binding to DNA at native sites in chromatin. Since the majority of topoisomerase I is localized in the nucleolus at rRNA genes, we have evaluated how low levels of actinomycin D, which terminate transcription of rRNA genes, affect the activity of topoisomerase I. In vivo, as well as in vitro with purified topoisomerase I, we have found that drug treatment extends the half-life of the covalent topoisomerase-DNA complex. Actinomycin D stabilizes the nicked intermediate in the cleavage and resealing reaction but otherwise does not significantly alter the strand-passing ability of topoisomerase I. Sequence-specific cleavages by topoisomerase I were stimulated by actinomycin D at identical sequences recognized by the enzyme in the absence of drug. The localization of topoisomerase I in the nucleolus, coupled with the observation that transcription in this organelle is highly sensitive to actinomycin D and camptothecin treatment, leads us to propose that topoisomerase I contributes to actinomycin D inhibition of transcription.