Intermediates in the replication of circular and linear M13 double-stranded DNA by bacteriophage T7 proteins have been examined by electron microscopy. Synthesis generated double-stranded DNA molecules containing a single replication fork with a linear duplex tail. A complex presumably consisting of T7 DNA polymerase and gene 4 helicase/primase molecules was present at the fork together with a variable amount of single-stranded DNA sequestered by gene 2.5 single-stranded DNA binding protein. Analysis of the length distribution of Okazaki fragments formed at different helicase/primase concentrations was consistent with coupling of leading and lagging strand replication. Fifteen to forty percent of the templates engaged in replication have a DNA loop at the replication fork. The loops are fully double-stranded with an average length of approximately 1 kilobase. Labeling with biotinylated dCTP showed that the loops consist of newly synthesized DNA, and synchronization experiments using a linear template with a G-less cassette demonstrated that the loops are formed by active displacement of the lagging strand. A long standing feature of models for coupled leading/lagging strand replication has been the presence of a DNA loop at the replication fork. This study provides the first direct demonstration of such loops.