A series of test substrates have been synthesized to establish the effect of termini on the putative exoribonuclease H activity of reverse transcriptase. Recombinant reverse transcriptase from human immunodeficiency virus, natural enzyme from avian myeloblastosis virus, and a known endonuclease, Escherichia coli ribonuclease H, cleaved relaxed, circular, covalently closed plasmids in which 770 consecutive residues of one strand were ribonucleotides. The avian enzyme also deadenylated capped globin mRNA with a covalently attached oligo(dT) tail at the 3' end. These results resolve a long-standing controversy-that the viral enzymes are obligatory exonucleases in vitro, based on their failure to cleave certain substrates for E. coli ribonuclease H. including circular poly(A)-linear poly(T) and ribonucleotide-substituted supercoiled plasmids, but resemble endonucleases in vivo, based on their ability to degrade RNA in complex DNARNA hybrids. The data strongly suggest that the viral enzymes are endonucleases with exquisite sensitivity to the conformation of heteroduplexes. Inhibition of viral, but not cellular, ribonuclease H with ribonucleoside-vanadyl complexes further distinguishes these enzymes.The functions encoded in the genomes of retroviruses have come under increasingly intense scrutiny since the human immunodeficiency virus (HIV) was isolated and recognized as the causative agent of AIDS. However, the most promising drugs or vaccines target only two HIV functions; 3'-azido-3'-deoxythymidine (AZT) acts predominantly as an inhibitor of the polymerase activity of reverse transcriptase (1) and recombinant CD4 inhibits viral attachment by binding to products of the env gene (reviewed in ref.2).A retroviral function that has attracted relatively little attention, despite its being carried out by one of the better characterized proteins, is the ribonuclease H (RNase H) activity of reverse transcriptase. An RNase H cleaves RNA in a DNARNA hybrid. The viral enzyme is responsible for degradation of genomic viral RNA after synthesis of minusstrand DNA has occurred. Upon removal of the RNA moiety of the DNARNA hybrid, minus-strand DNA becomes available as a template for synthesis of plus-strand DNA (3). The RNase H activity of reverse transcriptase has also been implicated in releasing the tRNA primer that is covalently bound to minus-strand DNA (4), in nicking viral RNA to generate the polypurine-rich oligoribonucleotide that primes synthesis of plus-strand DNA, and in removing the polypurine tract from the DNA extension to which it is linked (5-9).The RNase H activities of reverse transcriptases are believed to be exonucleases that can attack RNA from either the 5' or the 3' end, whereas the normal cellular RNase H activities are endonucleases (10-12). These conclusions were based on experiments with molecules of two types: synthetic hybrids with blocked termini and circles. Both were cleaved by the RNase H isolated either from Escherichia coli or from mammalian tissues, but neither served as a substrate for ...