A covalently closed, circular heteroduplex containing a G – T mismatch and a single hemimethylated d(GATC) site is subject to efficient methyl-directed mismatch correction in Escherichia coli extracts when repair DNA synthesis is severely restricted by limiting the concentration of exogenously supplied deoxyribonucleoside-5′-triphosphates or by supplementing reactions with chain-terminating 2′,3′-dideoxynucleoside triphosphates. However, repair under these conditions results in formation of a single-strand gap in the region of the molecule containing the mismatch and the d(GATC) site. These findings indicate that repair DNA synthesis required for methyl-directed correction can initiate in the vicinity of the mispair, and they are most consistent with a repair reaction involving 3′ → 5′ excision (or strand displacement) from the d(GATC) site followed by 5′ → 3′ repair DNA synthesis initiating in the vicinity of the mismatch.Key words: DNA repair, gene conversion, mismatch correction, mutagenesis.