The double-stranded linear DNA of Bacillus subtilis phage O29 is replicated by a mechanism in which a terminal protein (TP) acts as a primer. The second 3'-terminal nucleotide of the template directs the incorporation of the 5'-terminal nucleotide into the TP, giving rise to the initiation complex TP-dAMP. Elongation then proceeds by a sliding-back mechanism in which the dAMP covalently linked to the TP pairs to the 3'-terminal nucleotide of the template strand to recover full-length DNA. We have studied the sequence requirements for efficient initiation of replication using mutated TP-free double-stranded DNA fragments. Efficient initiation only requires the terminal repetition 5'-AA. The 3'-terminal T, although not used as template, increases the affinity of DNA polymerase for the initiator nucleotide; in addition, although to a minor extent, the third 3'-terminal position also directs the formation of the initiation complex and modulates the initiation rate at the second position. Efficient elongation requires a previous sliding-back, demanding again a repetition of two nucleotides at the 3' end; if the sliding-back is prevented, a residual elongation can proceed directly from the second position or after jumping back from the third to the first position.