The N348I mutation at the connection subdomain of HIV-1 reverse transcriptase (RT) confers clinically significant resistance to both nucleoside and non-nucleoside RT inhibitors (NNRTIs) by mechanisms that are not well understood. We used transient kinetics to characterize the enzymatic properties of N348I RT and determine the biochemical mechanism of resistance to the NNRTI nevirapine (NVP). We demonstrate that changes distant from the NNRTI binding pocket decrease inhibitor binding (increase K(d)(-NVP)) by primarily decreasing the association rate of the inhibitor (k(on-NVP)). We characterized RTs mutated in either p66 (p66(N348I)/p51(WT)), p51 (p66(WT)/p51(N348I)), or both subunits (p66(N348I)/p51(N348I)). Mutation in either subunit caused NVP resistance during RNA-dependent and DNA-dependent DNA polymerization. Mutation in p66 alone (p66(N348I)/p51(WT)) caused NVP resistance without significantly affecting RNase H activity, whereas mutation in p51 caused NVP resistance and impaired RNase H, demonstrating that NVP resistance may occur independently from defects in RNase H function. Mutation in either subunit improved affinity for nucleic acid and enhanced processivity of DNA synthesis. Surprisingly, mutation in either subunit decreased catalytic rates (k(pol)) of p66(N348I)/p51(N348I), p66(N348I)/p51(WT), and p66(WT)/p51(N348I) without significantly affecting affinity for deoxynucleotide substrate (K(d)(-dNTP)). Hence, in addition to providing structural integrity for the heterodimer, p51 is critical for fine tuning catalytic turnover, RNase H processing, and drug resistance. In conclusion, connection subdomain mutation N348I decreases catalytic efficiency and causes in vitro resistance to NVP by decreasing inhibitor binding.