Many proteins that interact with DNA perform or enhance their specific functions by binding simultaneously to multiple target sites, thereby inducing a loop in the DNA. The dynamics and energies involved in this loop formation influence the reaction mechanism. Tethered particle motion has proven a powerful technique to study in real time protein-induced DNA looping dynamics while minimally perturbing the DNA–protein interactions. In addition, it permits many single-molecule experiments to be performed in parallel. Using as a model system the tetrameric Type II restriction enzyme SfiI, that binds two copies of its recognition site, we show here that we can determine the DNA–protein association and dissociation steps as well as the actual process of protein-induced loop capture and release on a single DNA molecule. The result of these experiments is a quantitative reaction scheme for DNA looping by SfiI that is rigorously compared to detailed biochemical studies of SfiI looping dynamics. We also present novel methods for data analysis and compare and discuss these with existing methods. The general applicability of the introduced techniques will further enhance tethered particle motion as a tool to follow DNA–protein dynamics in real time.