A Z-DNA binding protein has been isolated and characterized by biochemical means from Drosophila melanogaster tissue culture cells and embryos. This protein shares the following properties with the known, cloned Drosophila topoisomerase II: (1) expression of an ATP-dependent relaxation activity on supercoiled DNA; (2) a monomer mass of 165 kDa in SDS denaturing gels; (3) a sedimentation coefficient, S20,w, of approximately 10 S for the active enzyme; (4) cross-reactivity for the respective monoclonal and polyclonal antibodies; (5) generation of covalent enzyme-DNA intermediates at preferred cutting sites in the Drosophila HSP70 intergenic spacer region; (6) inhibition of DNA relaxation activity by antitumor drugs, e.g., the etoposide VM26, and by monospecific antibodies raised against the protein; and (7) in vitro phosphorylation by a casein kinase activity. However, we have identified new properties for our topoisomerase II preparation not previously reported for the conventionally isolated enzyme: (1) The enzyme binds to Z-DNA with an affinity 2 orders of magnitude greater than that for B-DNA. (2) The binding to Z-DNA is increased 5-10-fold by GTP or GTP-gamma-S. (3) GTP and GTP-gamma-S inhibit the catalytic activity of topoisomerase II through a proposed allosteric mechanism. (4) Z-DNA inhibits the relaxation of closed circular supercoiled DNA. (5) The preparation consists of a single polypeptide chain of 165 kDa on denaturing SDS gels with no evidence of proteolytic degradation. We postulate that the Z-DNA binding activity of undegraded topoisomerase II may be important in targeting the enzyme both to structural motifs required for chromatin organization and to sites of local supercoiling. Some of these features arise during processes such as replication and gene expression and may be more frequent during embryogenesis and early development.