Transcription of DNA from the RNA genome of retroviruses by reverse transcriptase involves an unusual translocation of the growing chain from the 5' end to the 3' end of the RNA template. In order to elucidate the mechanism by which this translocation occurs, we have used chain termination to analyze nascent viral DNA synthesized in vitro by avian sarcoma virus, and we have determined the nucleotide sequence of appropriate regions of viral DNA isolated from infected cells and cloned into prokaryotic vectors. Our results provide direct experimental evidence for a previously proposed model in which a short terminal redundancy in viral RNA, and a DNA copy of the redundant sequence, are used to allow the growing DNA chain to move from the 5' to the 3' end of the template. Transcription of avian sarcoma virus RNA with purified reverse transcriptase also generates an anomalous product, a hairpin DNA that arises when the initial DNA transcript folds back on itself to continue synthesis. The foldback is mediated by an inverted repeat of 5 nucleotides in the sequence of nascent DNA. Anomalous hairpin DNA is not produced by detergent-activated virions. Thus, constituents of the virons or the configuration of encapsidated viral RNA must faciliatate correct transcription
