The Escherichia coli prophage N15 exists as a linear DNA molecule with covalently closed ends. Purified N15 protelomerase TelN is the only protein required to convert circular DNA substrates to the linear form with hairpin termini. Within the center of the telomerase occupancy site tos, the target for TelN is the 56-bp telRL consisting of the central 22-bp palindrome telO and two 14-bp flanking inverted sequence repetitions. DNase I footprinting of TelN-telRL complexes shows a segment of ϳ50 bp protected by TelN. Surface plasmon resonance studies demonstrate that this extended footprint is caused by two TelN molecules bound to telRL. Stable TelN-target DNA complexes are achieved with telRL; however, the additional sequences of tos stabilize the TelN-target complexes. TelO alone is not sufficient for specific stable complex formation. However, processing can occur, i.e. generation of the linear covalently closed DNA. Within the context of telRL, sequences of telO are involved in specific TelN-telRL complex formation, in processing itself, and/or in recognition of the processing site. The sequence of the central (CG) 3 within telO that is part of a 14-bp stretch proposed to have Z-DNA conformation is essential for processing but not for formation of specific TelN-telRL complexes. The concerted action of both TelN molecules at the target site is the basis for telomere resolution. Capturing of reaction intermediates demonstrates that TelN binds covalently to the 3-phosphoryl of the cleaved strands.N15 is a lambdoid, temperate Escherichia coli phage that has double-stranded DNA with cohesive ends packaged in the virion (1). The complete nucleotide sequence of the 46-kb genome is known (2). Upon infection of E. coli, the DNA circularizes via the cos ends. In contrast to other temperate phages, N15 does not integrate into the host genome. Lysogeny is established by processing the telomere resolution site telRL to form a linear genome with covalently closed, hairpin-like ends telL and telR (see "Discussion"). The proposed telomerase occupancy site tos (1) contains a series of inverted repeats centered on the 56-bp palindromic telRL. This palindrome or part of it could form a potential cruciform structure that may function as the real substrate of the telomerase TelN. In vivo replication of linear N15 plasmids requires three N15-derived components as follows: the origin of replication ori, the replication initiation protein RepA, and TelN protein for resolution of the replicated telomeres (3). Ori probably is located immediately upstream of repA. repA is essential in N15 lytic replication and for maintenance of the linear prophage. Both lytic and lysogenic replication is independent of at least dnaA, dnaJ, dnaK, grpE, and recA (1, 4, 5). For telomere resolution, in vitro purified TelN and a telRL substrate are sufficient (6). In contrast to eukaryotic telomerases, TelN seems to be purely proteinaceous, lacking DNA synthesizing activity. The cleavingjoining activity of TelN resembles a specialized type of integrase that u...