Bacterial insertion sequences (IS) play an important role in restructuring their host genomes. IS608, from Helicobacter pylori, belongs to a newly recognized and widespread IS group with a unique transposition mechanism. We have reconstituted the entire set of transposition cleavage and strand transfer reactions in vitro and find that, unlike any other known transposition system, they strictly require single-strand DNA. TnpA, the shortest identified transposase, uses a nucleophilic tyrosine for these reactions. It recognizes and cleaves only the IS608 "top strand." The results support a transposition model involving excision of a single-strand circle with abutted left (LE) and right (RE) IS ends. Insertion occurs site specifically 3' to conserved and essential TTAC tetranucleotide and appears to be driven by LE. This single-strand transposition mode has important implications not only for dispersion of IS608 but also for the other members of this very large IS family.