BACKGROUND: Reverse transcription, which converts an RNA genome into double-stranded DNA, requires both the polymerase and RNase H activities of reverse transcriptase (RT). In vitro, poorly processive RT dissociates from partially copied RNA-DNA hybrids, that are usually extended by a second RT molecule. Despite similar structures, RNase HI of Escherichia coli can degrade RNA-DNA hybrids that are resistant to RNase H of RT. E. coli RNase HI is used to determine the accessibility to and requirement for RNA-DNA hybrids in reverse transcription in vivo and in vitro. RESULTS: In the presence of E. coli RNase HI, reverse transcription yields incomplete cDNA molecules due to degradation of RNA-DNA hybrids. Delivery of E. coli RNase HI to Ty1 particles via fusion to the capsid protein can reduce retrotransposition by more than 99%, also indicating inhibition of DNA synthesis in vivo. CONCLUSION: Inhibition of both reverse transcription in vitro and retrotransposition in vivo by E. coli RNase HI indicates that the poor processivity of RT exposes RNA-DNA hybrids critical for reverse transcription to degradation. Targeting a cellular RNase H to HIV may help define the site(s) of RNA-DNA hybrids that are susceptible to nonretroviral RNase H and may be useful for gene therapy to inhibit retroviral replication.