Human immunodeficiency virus-type 1 (HIV-1) reverse transcriptase (RT) coordinates DNA polymerization and ribonuclease H (RNase H) activities using two discrete active sites embedded within a single heterodimeric polyprotein. We have identified a novel thiophene diketo acid, 4-[5-(benzoylamino)thien-2-yl]-2,4-dioxobutanoic acid, that selectively inhibits polymerase-independent RNase H cleavage (IC(50) = 3.2 microm) but has no effect on DNA polymerization (IC(50) > 50 microm). The activity profile of the diketo acid is shown to be distinct from previously described compounds, including the polymerase inhibitor foscarnet and the putative RNase H inhibitor 4-chlorophenylhydrazone. Both foscarnet and the hydrazone inhibit RNase H cleavage and DNA polymerization activities of RT, yet neither inhibits the RNase H activity of RT containing a mutation in the polymerase active site (D185N) or an isolated HIV-1 RNase H domain chimera containing the alpha-C helix from Escherichia coli RNase HI, suggesting these compounds affect RNase H indirectly. In contrast, the diketo acid inhibits the RNase H activity of the isolated RNase H domain as well as full-length RT, and inhibition is not affected by the polymerase active site mutation. In isothermal titration calorimetry studies using the isolated RNase H domain, binding of the diketo acid is independent of nucleic acid but strictly requires Mn(2+) implying a direct interaction between the inhibitor and the RNase H active site. These studies demonstrate that inhibition of HIV-1 RNase H may occur by either direct or indirect mechanisms, and they provide a framework for identifying novel agents such as 4-[5-(benzoylamino)thien- 2-yl]-2,4-dioxobutanoic acid that specifically targets RNase H.