Tn5 is a composite transposon consisting of two IS50 sequences in inverted orientation with respect to a unique, central region encoding several antibiotic resistances. The IS50R element encodes two proteins in the same reading frame which regulate the transposition reaction: the transposase (Tnp), which is required for transposition, and an inhibitor of transposition (Inh). The inhibitor is a naturally occurring deletion variant of Tnp which lacks the N-terminal 55 amino acids. In this report, we present the purification of both the Tnp and Inh proteins and an analysis of their DNA binding properties. Purified Tnp, but not Inh, was found to bind specifically to the outside end of Tn5. Inh, however, stimulated the binding activity of Tnp to outside-end DNA and was shown to be present with Tnp in these bound complexes. Inh was also found to exist as a dimer in solution. These results indicate that the N-terminal 55 amino acids of Tnp are required for sequence-specific binding. They also suggest that Inh inhibits transposition by forming mixed oligomers with Tnp which still bind to the ends of the transposon but are defective for later stages of the transposition reaction.