The retrovirus-like mobile genetic element of Saccharomyces cerevisiae, Ty1, transposes to new genomic locations via the element-encoded integrase (IN). Here we report that purified recombinant IN catalyzed correct integration of a linear DNA into a supercoiled target plasmid. Ty1 virus-like particles (VLPs) integrated donor DNA more efficiently than IN. VLP and IN-mediated insertions occurred at random sites in the target. Mg(2+) was preferred over Mn(2+) for correct integration, and neither cation enhanced nonspecific nuclease activity of IN. Products consistent with correct integration events were also obtained by Southern analysis. Recombinant IN and VLPs utilized many, but not all, linear donor fragments containing non-Ty1 ends, including a U3 mutation which has been shown to be defective for transposition in vivo. Together, our results suggest that IN is sufficient for Ty1 integration in vitro and IN interacts with exogenous donors less stringently than with endogenous elements.