The bacterial insertion sequence IS903 has the unusual ability to transpose both replicatively and non-replicatively. The majority of products are simple insertions, while co-integrates, the product of replicative transposition, occur at a low frequency (<0.1% of simple insertions). In order to define the critical steps that determine the outcome of IS903 transposition, we have isolated mutants that specifically increase the rate of replicative transposition. Here we show that the nucleotide immediately flanking the transposon influences both overall transposition frequency and co-integrate formation. In particular, when the 3′-flanking nucleotide is A, co-integrates are increased 500-fold compared with a 3′ C. In addition, we have isolated five transposase mutants that increase replicative transposition. These residues are close to the catalytic residues and are thus likely to be part of the active site. These are the first transposase mutations described that affect the product of transposition. Our results are consistent with the hypothesis that a delay in cleavage of the 5′-flanking DNA will increase the effective half-life of the 3′-nicked transposon intermediate and consequently enhance co-integrate formation.