Targeted gene repair mediated by single-stranded oligonucleotides (SSOs) has great potential for use in functional genomic studies and gene therapy. Genetic changes have been created using this approach in a number of prokaryotic and eukaryotic systems, including mouse embryonic stem cells. However, the underlying mechanisms remain to be fully established. In one of the current models, the 'annealing-integration' model, the SSO anneals to its target locus at the replication fork, serving as a primer for subsequent DNA synthesis mediated by the host replication machinery. Using a lambda-Red recombination-based system in the bacterium Escherichia coli, we systematically examined several fundamental premises that form the mechanistic basis of this model. Our results provide direct evidence strongly suggesting that SSO-mediated gene repair is mechanistically linked to the process of DNA replication, and most likely involves a replication intermediate. These findings will help guide future experiments involving SSO-mediated gene repair in mammalian and prokaryotic cells, and suggest several mechanisms by which the efficiencies may be reliably and substantially increased.