Baculovirus late RNAs are transcribed by a four-subunit RNA polymerase that is virus encoded. The late viral mRNAs are capped and polyadenylated, and we have previously shown that capping is mediated by the LEF-4 subunit of baculovirus RNA polymerase. Here we report studies undertaken to determine the mechanism of 3-end formation. A globin cleavage/polyadenylation signal, which was previously shown to direct 3-end formation of viral RNAs in vivo, was cloned into a baculovirus transcription template. In vitro assays with purified baculovirus RNA polymerase revealed that 3 ends were formed not by a cleavage mechanism but rather by termination after transcription of a T-rich region of the globin sequence. Terminated RNAs were released from ternary complexes and were subsequently polyadenylated. Mutational analyses indicated that the T-rich sequence was essential for termination and polyadenylation, but the poly(A) signal and the GT-rich region of the globin polyadenylation/cleavage signal were not required. Termination was not dependent on ATP hydrolysis, indicating a slippage mechanism.mRNA 3Ј-end formation is a complicated process that requires protein-nucleic acid and protein-protein interactions. The 3Ј ends of most eukaryotic RNA polymerase II transcripts are produced by a coupled cleavage/polyadenylation reaction that requires multiple factors (reviewed in references 8, 22, and 43). The processing machinery is recruited to transcription complexes by TFIID (9) and is targeted to the phosphorylated carboxy-terminal domain (CTD) of RNA polymerase II during transcription elongation (27). Recent studies have shown that RNA polymerase II itself is an essential factor in the polyadenylation step (20).Transcription termination by RNA polymerase II occurs downstream of the cleavage site and is less well understood. Termination is defined as the process of disrupting the transcription ternary complex, in which the RNA polymerases cease their elongation function, the nascent transcripts are released, and the RNA polymerases step off from the DNA templates. Disassembly of an RNA polymerase ternary complex is mediated by termination sequences that are recognized by the RNA polymerase or by termination factors (reviewed in references 37 and 39). Failure of the elongating polymerase to stop transcription before reaching an adjacent gene can lead to a reduction in the expression of the downstream gene by destabilizing the assembly of transcription initiation factors on the adjacent promoter (3,15,16,19,31). This is especially important to the gene expression programs of compact genomes, such as yeast and viruses, which have short intergenic sequences.Baculoviruses are large double-stranded DNA viruses that have been extensively used as protein expression vectors. The genomes of several baculovirus species have been sequenced and shown to be highly compressed (1,2,14). Viral gene expression is regulated in a temporal pattern (4, 11, 30) in which immediate-and delayed-early genes are transcribed by host cell RNA polymerase II,...