One postulated mechanism for how the SV40 enhancer stimulates transcription of linked genes involves the enhancer as a binding site for a sequence-specific "gyrase" activity. We sought to test this hypothesis directly by constructing a novel heteroduplex circle, termed a tailed-circle, in which one of the strands contains an extra palindromic sequence base-paired into a hairpin structure. The human beta-globin gene is placed in the circle and the SV40 enhancer on the hairpin tail, where a bound topoisomerase cannot supercoil the circle. Upon transfection of this DNA into HeLa cells the SV40 enhancer on the hairpin arm is still able to stimulate transcription of the beta-globin gene. Southern blot analysis of the DNA after transfection does not demonstrate any repair or replication of the tailed-circle in vivo. These results argue against the sequence-specific gyrase model for SV40 enhancer action.