Cre recombinase is a phage-derived enzyme that has found utility for precise manipulation of DNA sequences. Cre recognizes and recombines pairs of loxP sequences characterized by an inverted repeat and asymmetric spacer. Cre cleaves and religates its DNA targets such that error-prone repair pathways are not required to generate intact DNA products. Major obstacles to broader applications are lack of knowledge of how Cre recognizes its targets, and how its activity is controlled. The picture emerging from high resolution methods is that the dynamic properties of both the enzyme and its DNA target are important determinants of its activity in both sequence recognition and DNA cleavage. Improved understanding of the role of dynamics in the key steps along the pathway of Cre-loxP recombination should significantly advance our ability to both redirect Cre to new sequences and to control its DNA cleavage activity in the test tube and in cells.