Transcription of bacteriophage Mu is modulated by its repressor, by negative supercoiling, and by the Escherichia coli protein integration host factor (IHF). Two converging Mu promoters regulate lytic and lysogenic development. The influence of IHF on these convergent promoters depended on the DNA conformation. When Mu operator DNA changed from the relaxed to the negative supercoiled form, IHF changed from a stimulatory factor to an inhibitor of the repressor promoter, and the ratio of the lytic transcript relative to the repressor transcript increased by 40-fold. Flexibility in Mu operator DNA was demonstrated by an unusual supercoil-induced DNA conformation, which was detectable by chemical modification with bromoacetaldehyde or digestion with P1 nuclease. IHF binding adjacent to this site induced dramatic bending of Mu DNA. A topological model we call a superloop is proposed to explain the effect of IHF on Mu transcription in vitro and on the lytic-lysogeny decision of the virus grown in IHF and gyrase mutants.