Purified Rep protein, a replication initiator protein of plasmid pSC101, has less binding affinity for the direct repeats (DR) in the replication origin region (ori) than that for the inverted repeats (IR) in the promoter region of the structure gene of Rep (rep) (Sugiura, S. et al. (1990) J. Biochem. 107, 369-376). We found a protein factor that promotes binding of purified Rep to the DR sequence in the cell extract of Escherichia coli. In the presence of the factor, DNA fragments containing the DR sequence can form a specific DNA-protein complex by the addition of low concentrations of Rep. On the contrary, IR-containing DNA loses its binding activity for Rep by preincubation with the factor. We purified extensively the factor and identified it as exonuclease III (exo III). Enzymatic action of the factor or authentic exo III at 37-degrees-C is necessary for binding of Rep to DR-DNA. This binding of Rep to duplex DNA treated with exo III is DR-sequence specific. Since Rep cannot bind to the single stranded DR sequence, the present finding suggests that partial single-stranded regions around the DR sequence are required for binding of Rep.