The adeno-associated virus 2 (AAV), a single-stranded DNA-containing, nonpathogenic human parvovirus, has gained attention as a potentially useful vector for human gene therapy. However, the single-stranded nature of the viral genome significantly impacts upon the transduction efficiency, because the second-strand viral DNA synthesis is the rate-limiting step. We hypothesized that a host-cell protein interacts with the single-stranded D sequence within the inverted terminal repeat structure of the AAV genome and prevents the viral second-strand DNA synthesis. Indeed, a cellular protein has been identified that interacts specifically and preferentially with the D sequence at the 3 end of the AAV genome. This protein, designated the single-stranded Dsequence-binding protein (ssD-BP), is phosphorylated at tyrosine residues and blocks AAV-mediated transgene expression in infected cells by inhibiting the leading strand viral DNA synthesis. Inhibition of cellular protein tyrosine kinases by genistein results in dephosphorylation of the ssD-BP, leading not only to significant augmentation of transgene expression from recombinant AAV but also to autonomous replication of the wild-type AAV genome. Dephosphorylation of the ssD-BP also correlates with adenovirus infection, or expression of the adenovirus E4orf6 protein, which is known to induce AAV DNA replication and gene expression. Thus, phosphorylation state of the ssD-BP appears to play a crucial role in the life cycle of AAV and may prove to be an important determinant in the successful use of AAV-based vectors in human gene therapy.The adeno-associated virus 2 (AAV), a single-stranded DNAcontaining parvovirus, so far has not been shown to be associated with any pathology in humans (1, 2). The wild-type (wt) AAV genome has been shown to integrate in a sitespecific manner into human chromosome 19q13.3-qter (3-5). Thus, recombinant AAV vectors have emerged as useful alternatives to the more commonly used retroviral and adenoviral vectors for human gene therapy (6-10). However, recent studies from two independent laboratories have suggested that after infection, the leading strand viral DNA synthesis is a rate-limiting step in the efficient transduction by AAV vectors (11,12). AAV inverted terminal repeats (ITRs) contain 145 nt each, the terminal 125 nt of which are palindromic and form T-shaped hairpin (HP) structures. The 3Ј-HP structure serves as a primer for AAV DNA replication. AAV ITRs also contain an additional domain, designated the D sequence, which is a stretch of 20 nt that is not involved in HP formation (1, 2, 13). Our previous studies have indicated that the D sequence plays a crucial role in the efficient rescue, selective replication, and encapsidation of the AAV genome (14, 15). We hypothesized that a cellular protein(s) might interact with the D sequence and prevent the second-strand viral DNA synthesis. Indeed, using electrophoretic mobility-shift assays (EMSAs), we have recently provided evidence for the existence of a hitherto unknown host-c...