ATP-dependent DNA supercoiling catalyzed by Escherichia coli DNA gyrase was inhibited by oxolinic acid, a compound similar to but more potent than nalidixic acid and a known inhibitor of DNA replication in E. coli. The supercoiling activity of DNA gyrase purified from nalidixic acid-resistant mutant (nalA(R)) bacteria was resistant to oxolinic acid. Thus, the nalA locus is responsible for a second component needed for DNA gyrase activity in addition to the component determined by the previously described locus for resistance to novobiocin and coumermycin (cou). Supercoiling of lambda DNA in E. coli cells was likewise inhibited by oxolinic acid, but was resistant in the nalA(R) mutant. The inhibition by oxolinic acid of colicin E1 plasmid DNA synthesis in a cell-free system was largely relieved by adding resistant DNA gyrase. In the absence of ATP, DNA gyrase preparations relaxed supercoiled DNA; this activity was also inhibited by oxolinic acid, but not by novobiocin. It appears that the oxolinic acid-sensitive component of DNA gyrase is involved in the nicking-closing activity required in the supercoiling reaction. In the presence of oxolinic acid, DNA gyrase forms a complex with DNA, which can be activated by later treatment with sodium dodecyl sulfate and a protease to produce double-strand breaks in the DNA. This process has some similarities to the known properties of relaxation complexes.