In Drosophila, P-element transposition causes mutagenesis and genome instability during hybrid dysgenesis. The P-element 31-bp terminal inverted repeats (TIRs) contain sequences essential for transposase cleavage and have been implicated in DNA repair via protein-DNA interactions with cellular proteins. The identity and function of these cellular proteins were unknown. Biochemical characterization of proteins that bind the TIRs identified a heterodimeric basic leucine zipper (bZIP) complex between an uncharacterized protein that we termed "Inverted Repeat Binding Protein (IRBP) 18" and its partner Xrp1. The reconstituted IRBP18/Xrp1 heterodimer binds sequence-specifically to its dsDNA-binding site within the P-element TIRs. Genetic analyses implicate both proteins as critical for repair of DNA breaks following transposase cleavage in vivo. These results identify a cellular protein complex that binds an active mobile element and plays a more general role in maintaining genome stability.T ransposable elements contribute significantly to the organization and evolution of all eukaryotic genomes. Recent estimates of transposon content within the Drosophila melanogaster genome are between 5% and 10%, and in humans over half the genome is composed of mobile elements (1, 2). Although many of these elements, including the Drosophila P-element transposon, are still active (3), the cellular mechanisms used to combat the genotoxic effects of DNA double-strand breaks (DSBs) generated by transpositional recombination are not fully understood. The Drosophila P-transposable element provides an excellent model for understanding the ancient mechanisms used by the cell to counteract newly invading parasitic mobile DNA elements (4).The P-element transposon is a mobile DNA element that spread through wild populations of D. melangaster ∼100 y ago after most common laboratory strains were isolated (5, 6). P elements were identified by studying a genetic syndrome called "P-M hybrid dysgenesis." It was observed that males from wild populations (P strains) crossed to females from isolated laboratory stocks (M strains) yielded progeny that had germline mutations, temperature-sensitive sterility, and atypical male recombination (6). Reciprocal crosses yielded phenotypically normal progeny. The P element was shown to be the causative agent of these so-called P-M hybrid dysgenesis phenotypes by molecular analyses showing that P elements were present in variable locations in P strains yet totally absent from most M strains (7,8).The Drosophila P-element transposon encodes a GTP-dependent site-specific DNA transposase/integrase family enzyme (9, 10). At each end of the P-element transposon are perfect 31-bp terminal inverted repeats (TIRs), 11-bp internal inverted repeats that serve as enhancers of transposition, and internal 10-bp transposase binding sites (11-13) (Fig. 1A). The P-element transposase catalyzes DNA cleavage within the 31-bp TIRs to create 17-nt 3′ single-strand extensions at both the donor site and the transposon ends (14, 15)...