We have demonstrated that when the covalently joined ends of linear adeno-associated virus (AAV) DNA are resolved in vitro, the virus-encoded Rep protein becomes covalently attached to the 5' ends of the DNA. The covalent bond is between a tyrosine residue of the AAV Rep protein and a 5' phosphate of a thymidine residue in the AAV genome. Only the Rep protein encoded by the AAV p5 promoter, Rep68, was capable of becoming covalently attached to the ends of the AAV genome; the Rep proteins encoded by the p19 promoter were not. We also investigated some of the requirements for the complete in vitro resolution reaction. Inhibitor studies suggested that terminal resolution required DNA polymerase 8, ATP, and the deoxyribonucleoside triphosphates but did not require the remaining ribonucleoside triphosphates, DNA polymerase a, RNA polymerase II, or topoisomerases I and II. Finally, purified AAV Rep68, when added to the crude cytosol from uninfected HeLa cells, was sufficient for resolution. This suggested that terminal resolution relies on host enzymes and the virus-encoded p5 Rep proteins. Adeno-associated virus (AAV) contains a single-stranded DNA genome of 4,680 bases (5, 68). Efficient replication of the AAV chromosome requires the presence of a helper virus (5). The most efficient helper viruses are herpesviruses or adenoviruses, but their proteins do not appear to be directly involved in the replication of AAV DNA (5, 11, 47, 64, 78). Two AAV genes are required for AAV DNA replication. The first is the terminal repeat which is required for, in addition to DNA replication (62, 65), integration, rescue, and packaging of AAV genomes (46, 61). The second is the rep gene (28, 73) which codes for a family of four nonstructural proteins: Rep78, Rep68, Rep52, and Rep4O (48, 68). The two larger Rep proteins (Rep78 and Rep68) are synthesized from the mRNAs initiated at the AAV p5 promoter, while the transcripts for the smaller Rep proteins are initiated at the p19 promoter (25, 26, 36, 44, 48, 68). Mutations which affect only the p5 Rep proteins are defective for viral DNA replication and the transactivation of viral gene expression (28, 33, 74). The smaller p19 Rep proteins do not appear to have a role in terminal resolution (14). The model for AAV DNA replication (6, 13, 42, 43, 70) predicts that the terminal hairpins prime DNA synthesis to produce an intermediate which is covalently joined at one end (Fig. 1, step a). Following this, a site-specific and * Corresponding author.