bThe phosphoprotein (P) of vesicular stomatitis virus (VSV) plays essential roles in viral RNA synthesis. It associates with nascent nucleoprotein (N) to form N 0 -P (free of RNAs), thereby preventing the N from binding to cellular RNAs and maintaining the N in a viral genomic RNA encapsidation-competent form for transcription and replication. The contributions of phosphorylation of P to transcription and replication have been studied intensively, but a concrete mechanism of action still remains unclear. In this study, using a VSV minigenome system, we demonstrated that a mutant of P lacking N-terminal phosphorylation (P3A), in which the N-terminal phosphate acceptor sites are replaced with alanines (S60/A, T62/A, and S64/A), does not support transcription and replication. However, results from protein interaction assays showed that P3A self-associates and interacts with N and the large protein (L) as efficiently as P does. Furthermore, purified recombinant P3A from Sf21 cells supported transcription in an in vitro transcription reconstitution assay. We also proved that P3A is not distributed intranuclearly in vivo. CsCl gradient centrifugation showed that P3A is incapable of preventing N from binding to cellular RNAs and therefore prevents functional template formation. Taken together, our results demonstrate that N-terminal phosphorylation is indispensable for P to prevent N from binding to nonviral RNAs and to maintain the N-specific encapsidation of viral genomic RNA for functional template formation. V esicular stomatitis virus (VSV) is a nonsegmented negativestrand RNA virus that serves as the prototype of the rhabdovirus group. The active RNA polymerase complex of VSV is composed of the large protein (L) and its cofactor, the phosphoprotein (P) (1), and both are required for the transcription and replication of the viral negative-sense single-stranded RNA genome, which is tightly encapsidated by nucleoprotein (N) (2, 3). P is a multifunctional protein: it associates with newly synthesized N during infection to prevent N from binding to cellular RNAs and maintains the replication-competent form of N by specifically encapsidating the nascent viral genomic/antigenomic RNA (4-6). On the other hand, it may also help to protect the L protein from proteolytic degradation (7). In addition, P also forms a tripartite replicase complex with L and N (L-N-P) to convert the N-RNA template to positive-sense genomic RNA in vivo. Via mutational and biochemical studies, P of the VSV Indiana serotype has been divided arbitrarily into three domains, i.e., N-terminal domain I (residues 1 to 137), domain II (residues 211 to 244), and domain III (residues 245 to 265), and a hypervariable hinge region (residues 138 to 210).Like the P's of many other negative-strand RNA viruses, the P of VSV is phosphorylated in infected cells and virions (8-10). The P of the VSV Indiana serotype has been shown to be phosphorylated in two different domains: N-terminal domain I, in which phosphorylation sites were mapped to S60, T62, and S64, and ...