Reaction intermediates and products formed by the restriction endonuclease of Escherichia coli B with fd replicative form DNA substrates containing recognition sites in known positions and orientations have been characterized by electron microscopy. After exposure of these substrates to enzyme, loops of duplex DNA were frequently observed, usually at or near the termini. Analysis of the size and structure of the loops observed with various DNA substrates suggests that the enzyme binds initially to the recognition site then remains bound to the DNA in the region of this site while tracking towards a site of cleavage. Tracking appears to occur only on the 5′ side of the asymmetric recognition sequence, 5′ ... T-G-A-(N)8-T-G-C-T ... 3′; however, the location of the cleavage sites appears to be random, at least within certain limits of distance from the recognition site. Enzyme-DNA complexes remain intact even after the double-strand cleavage is completed, and this complex acts as a potent ATPase with no obvious function. This latter reaction might represent an artifactual uncoupling of ATP hydrolysis from the tracking of the enzyme along the DNA; alternatively, it might indicate an in vivo function for the enzyme of which we are unaware. © 1979.