DNA loop formation is one of several mechanisms used by organisms to regulate genes. The free energy of forming a loop is an important factor in determining whether the associated gene is switched on or off. In this paper we use an elastic rod model of DNA to determine the free energy of forming short 50–100 basepair, protein mediated DNA loops. Superhelical stress in the DNA of living cells is a critical factor determining the energetics of loop formation, and we explicitly account for it in our calculations. The repressor protein itself is regarded as a rigid coupler; its geometry enters the problem through the boundary conditions it applies on the DNA. We show that a theory with these ingredients is sufficient to explain certain features observed in modulation of in vivo gene activity as a function of the distance between operator sites for the lac repressor. We also use our theory to make quantitative predictions for the dependence of looping on superhelical stress, which may be testable both in vivo and in single-molecule experiments such as the tethered particle assay and the magnetic bead assay.