In this paper, we describe a scheme utilizing the Xenopus egg extract system to simultaneously evaluate DNA-interacting drugs as potential anti-cancer agents and gain insights into the mechanisms of drug action. We studied two DNA intercalators, daunomycin (DM), a cancer chemotherapeutic, and ethidium bromide (EtBr), a compound with no reported therapeutic value. Consistent with our earlier report, we find that DM inhibits DNA replication in a concentration-dependent manner. In contrast, EtBr does not inhibit replication over the same concentration range. The environment in which drug–DNA interactions take place is an important determinant of the effect of the drug on DNA replication. While neither intercalator inhibits nuclear membrane assembly nor nuclear protein import, DM does disrupt chromatin structure at very low concentrations, whereas EtBr does not. This system may prove useful for large scale screening of DNA-interacting chemotherapeutic compounds in a cellular milieu.