The switch from transcription to replication of the VSV genome is coupled to assembly of nascent chains and involves an unspecified change in the P-L polymerase complex when it reaches the leader-N gene junction. PoIR VSV mutants, in contrast to wild-type virus, read through this first gene junction at high frequency without concurrent assembly, and they show altered ATP requirements for transcription in vitro. The mutation(s) responsible for the poIR phenotype segregates to the N-RNA template fraction. We report here that both poIR1 and poIR2 mutants display severe growth restriction in mouse L cells but not in BHK cells. Four of six poIR1 revertant viruses, originating from rare plaques on L cells, showed wild-type characteristics for growth, readthrough of leader-N gene junction, and ATP utilization, while two showed partial and quantitatively parallel coreversion of all properties. Sequence analysis of N and P genes of poIR mutants and revertants provided proof that a single mutation in the N protein, Arg179 to His, is responsible for the poIR phenotype. PoIR1, but not poIR2, also displayed a phenotypically silent GA-to-GG change in the N-P intergenic dinucleotide sequence Five of six revertants retained the poIR1 N protein mutation and showed no change in their P gene. We conclude that the L protein likely contains second-site suppressors of the poIR phenotype, and we propose that the switch from transcription to replication is modulated by an ATP-dependent interaction between the template-associated N protein and the L subunit of the P L polymerase complex.