Hairpin structures can inhibit DNA replication and are intermediates in certain recombination reactions. We have shown that the purified SbcCD protein of Escherichia coli cleaves a DNA hairpin. This cleavage does not require the presence of a free (3' or 5') DNA end and generates products with 3'-hydroxyl and 5'-phosphate termini. Electron microscopy of SbcCD has revealed the "head-rod-tail" structure predicted for the SMC (structural maintenance of chromosomes) family of proteins, of which SbcC is a member. This work provides evidence consistent with the proposal that SbcCD cleaves hairpin structures that halt the progress of the replication fork, allowing homologous recombination to restore DNA replication.