The Rag proteins carry out V(D)J recombination through a process mechanistically similar to cut-and-paste transposition. Specifically, Rag complexes form DNA hairpins through direct transesterification, using a catalytic Asp-Asp-Glu (DDE) triad in Rag1. How is sufficient DNA distortion introduced to allow hairpin formation? We hypothesized that, like certain transposases, the Rag proteins might use aromatic amino acid residues to stabilize a flipped-out base. Through in vivo and in vitro experiments and structural predictions, we identified residues in Rag1 crucial for hairpin formation. One of these, a conserved tryptophan (Trp893), probably participates in base-stacking interactions near the cleavage site, as do Trp298, Trp265 and Trp319 in the Tn5, Tn10 and Hermes transposases, respectively. Other residues surrounding the catalytic glutamate (YKEFRK) may share functional similarities with the YREK motif in IS4 family transposases.