Previous biochemical studies have demonstrated that synergy between non-nucleoside reverse transcriptase (RT) inhibitors (NNRTI) and nucleoside RT inhibitors (NRTIs) is due to inhibition by the NNRTI of the rate at which HIV-1 RT facilitates ATP-mediated excision of NRTIs from chain-terminated template/primers (T/P). However, these studies did not take into account the possible effects of NNRTI on the ribonuclease H (RNase H) activity of RT, despite recent evidence that suggests an important role for this activity in the NRTI excision phenotype. Accordingly, in this study, we compared the ability of efavirenz to inhibit the incorporation and excision of zidovudine (AZT) by HIV-1 RT using DNA/DNA and RNA/DNA T/Ps that were identical in sequence. Whereas IC(50) values for the inhibition of AZT-triphosphate incorporation by efavirenz were essentially similar for both DNA/DNA and RNA/DNA T/P, a 19-fold difference in IC(50) was observed between the AZT-monophosphate excision reactions, the RNA/DNA T/P substrate being significantly more sensitive to inhibition. Analysis of the RNase H cleavage events generated during ATP-mediated excision reactions demonstrated that efavirenz dramatically increased the rate of appearance of a secondary cleavage product that decreased the T/P duplex length to only 10 nucleotides. Studies designed to delineate the relationship between T/P duplex length and efficiency of AZT excision demonstrated that RT could not efficiently unblock chain-terminated T/P if the RNA/DNA duplex length was less than 12 nucleotides. Taken together, these results highlight an important role for RNase H activity in the NRTI excision phenotype and in the mechanism of synergy between NNRTI and NRTI.