We have developed a novel way to use the Cre/loxP system for in vitro manipulation of DNA and a technique to clone DNA into circular episomes. The method is fast, reliable, and allows flexible cloning of DNA fragments into episomes containing a loxP site. We show that a loxP site can serve as a universal target site to clone a DNA fragment digested with any restriction enzyme(s). This technique abolishes the need for compatible restriction sites in cloning vectors and targets by generating custom-designed 5′, 3′, or blunt ends in the desired orientation and reading frame in the vector. Therefore, this method eliminates the limitations encountered when DNA fragments are cloned into vectors with a confined number of cloning sites. The 34-bp loxP sequence assures uniqueness, even when large episomes are manipulated. We present three examples, including the manipulation of a bacterial artificial chromosome. Because DNA manipulation takes place at a loxP site, we refer to this technique as loxP-directed cloning.