The bacteriophage phi29 replication protein p1 (85 amino acids) is membrane associated in Bacillus subtilis-infected cells. The C-terminal 52 amino acid residues of p1 are sufficient for assembly into protofilament sheet structures. Using chemical cross-linking experiments, we demonstrate here that p1DeltaC43, a C-terminally truncated p1 protein that neither associates with membranes in vivo nor self-interacts in vitro, can interact with the primer terminal protein (TP) in vitro. Like protein p1, plasmid-encoded protein p1DeltaC43 reduces the rate of phi29 DNA replication in vivo in a dosage-dependent manner. We also show that truncated p1 proteins that retain the N-terminal 42 amino acids, when present in excess, interfere with the in vitro formation of the TP.dAMP initiation complex in a reaction that depends on the efficient formation of a primer TP-phi29 DNA polymerase heterodimer. This interference is suppressed by increasing the concentration of either primer TP or phi29 DNA polymerase. We propose a model for initiation of in vivo phi29 DNA replication in which the viral replisome attaches to a membrane-associated p1-based structure.