A preferred site for HIV-1 recombination was identified in vivo and in vitro surrounding the beginning of the HIV-1 gag gene. This G-rich gag hotspot for recombination contains three evenly spaced G-runs that stalled reverse transcriptase. Disruption of the G-runs suppressed both the associated pausing and strand transfer in vitro. Significantly, this same gag sequence was able to fold into a G-quartet monomer, dimer, and tetramer, depending on the cations employed. The pause band at the G-run (nucleotide (nt) 405-409), which was predicted to be involved in forming a G-quartet monomer, diminished with increased HIV-1 nucleocapsid (NC) protein. More NC induced stronger pauses at other G-runs (nt 363-367 and nt 382-384), a region that forms a G-quartet dimer, adhering the two RNA templates. We hypothesized that NC induces the unfolding of the monomeric G-quartet but stabilizes the dimeric interaction. We tested this by inserting a known G-quartet formation sequence, 5-(UGGGGU) 4 -3, into a relatively structure-free template from the HIV-1 pol gene. Strand transfer assays were performed with cations that either encourage (K ؉ ) or discourage (Li ؉ ) G-quartet formation with or without NC. Strikingly, a G-quartet monomer was observed without NC, whereas a G-quartet dimer was observed with NC, both only in the presence of K ؉ . Moreover, the transfer efficiency of the dimerized template (with K ؉ and NC) reached about 90%, approximately 2.5-fold of that of the non-dimerized template. Evidently, template dimerization induced by NC creates a proximity effect, leading to the unique high peak of transfer at the gag recombination hotspot.