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DNA palindromes are hotspots for DNA double strand breaks, inverted duplications and intra-chromosomal translocations in a wide spectrum of organisms from bacteria to humans. These reactions are mediated by DNA secondary structures such as hairpins and cruciforms. In order to further investigate the pathways of formation and cleavage of these structures, we have compared the processing of a 460 base pair (bp) perfect palindrome in the Escherichia coli chromosome with the same construct interrupted by a 20 bp spacer to form a 480 bp interrupted palindrome. We show here that the perfect palindrome can form hairpin DNA structures on the templates of the leading- and lagging-strands in a replication-dependent reaction. In the presence of the hairpin endonuclease SbcCD, both copies of the replicated chromosome containing the perfect palindrome are cleaved, resulting in the formation of an unrepairable DNA double-strand break and cell death. This contrasts with the interrupted palindrome, which forms a hairpin on the lagging-strand template that is processed to form breaks, which can be repaired by homologous recombination.