Site-specific DNA inversion in phage Mu is catalysed by the phage-encoded DNA invertase Gin and a host factor FIS. We demonstrate that purified Gin protein binds specifically to 34-bp sequences that flank the G segment as inverted repeats. Each inverted repeat (IR) contains two binding sites for Gin which have to be arranged in a specific configuration to constitute a recombinogenic site. While one of these sites is bound when present alone, the other site is bound only in conjunction with the first one, suggesting cooperative binding. In addition to the sites within the IR, Gin binds with lower affinity to AT-rich sequences adjacent to the IR. We demonstrate that these sites do not participate in the inversion reaction. The IR itself can be shortened to 25 bp without effect on inversion frequency. Using gel mobility shift experiments on circular permuted fragments containing the IR we show that Gin bends DNA upon binding. We discuss the possibility that DNA bending is related to the formation of a productive synaptic complex.