Model oligodeoxyribonucleotide substrates representing viral DNA integration intermediates with a gap and a two-nucleotide 5' overhang were used to examine late steps in human immunodeficiency virus, type 1 (HIV-1) retroviral integrase (IN)-catalyzed DNA integration in vitro. HIV-1 or avian myeloblastosis virus reverse transcriptase (RT) were capable of quantitatively filling in the gap to create a nicked substrate but did not remove the 5' overhang. HIV-1 IN also failed to remove the 5' overhang with the gapped substrate. However, with a nicked substrate formed by RT, HIV-1 IN removed the overhang and covalently closed the nick in a disintegration-like reaction. The efficiency of this closure reaction was very low. Such closure was not stimulated by the addition of HMG-(I/Y), suggesting that this protein only acts during the early processing and joining reactions. Addition of Flap endonuclease-1, a nuclease known to remove 5' overhangs, abolished the closure reaction catalyzed by IN. A series of base pair inversions, introduced into the HIV-1 U5 long terminal repeat sequence adjacent to and/or including the conserved CA dinucleotide, produced no or only a small decrease in the HIV-1 IN-dependent strand closure reaction. These same mutations caused a significant decrease in the efficiency of concerted DNA integration by a modified donor DNA in vitro, suggesting that recognition of the ends of the long terminal repeat sequence is required only in the early steps of DNA integration. Finally, a combination of HIV-1 RT, Flap endonuclease-1, and DNA ligase is capable of quantitatively forming covalently closed DNA with these model substrates. These results support the hypothesis that cellular enzyme(s) may catalyze the late steps of retroviral DNA integration.