The mammalian circadian clock is based on a transcription-translation feedback loop (TTFL) in which CLOCK and BMAL1 proteins act as transcriptional activators of Cryptochrome and Period genes, which encode proteins that repress CLOCK-BMAL1 with a periodicity of ∼ 24 h. In this model, the mechanistic roles of CRY and PER are unclear. Here, we used a controlled targeting system to introduce CRY1 or PER2 into the nuclei of mouse cells with defined circadian genotypes to characterize the functions of CRY and PER. Our data show that CRY is the primary repressor in the TTFL: It binds to CLOCK-BMAL1 at the promoter and inhibits CLOCK-BMAL1-dependent transcription without dissociating the complex ("blocking"-type repression). PER alone has no effect on CLOCK-BMAL1-activated transcription. However, in the presence of CRY, nuclear entry of PER inhibits transcription by displacing CLOCK-BMAL1 from the promoter ("displacement"-type repression). In light of these findings, we propose a new model for the mammalian circadian clock in which the negative arm of the TTFL proceeds by two different mechanisms during the circadian cycle.