In human cells, large DNA loop heterologies are repaired through a nick-directed pathway independent of mismatch repair. However, a 3'-nick generated by bacteriophage fd gene II protein heterology is not capable of stimulating loop repair. To evaluate the possibility that a mismatch near a loop could induce both repair types in human cell extracts, we have constructed and tested a set of DNA heteroduplexes each of which contains a combination of mismatches and loops. We demonstrate that a strand break generated by restriction endonucleases, 3' to a large loop, is capable of provoking and directing loop repair. The repair of 3'-heteroduplexes in human cell extracts is very similar to that of 5'-heteroduplex repair, being strand specific and highly biased to the nicked strand. This observation suggests that the loop repair pathway possesses bi-directional repair capability similar to that of the bacterial loop repair system. We also found that a nick 5', to a coincident mismatch and loop, can apparently stimulate the repair of both. In contrast, 3'-nick-directed repair of a G-G mismatch was reduced when in the vicinity a loop (33 or 46 base pair between two sites). Increasing the distance separating the G-G mismatch and the loop by 325 base pairs, restores the efficiency of repair to the level of single base-base mismatch. This observation suggests interference between 3'-nick-directed large loop repair and conventional mismatch repair systems when a mispair is near a loop. We propose a model where DNA repair systems avoid simultaneous repair at adjacent sites to avoid the creation of double stranded DNA breaks.