The linear form of Epstein-Barr virus (EBV) DNA has homologous direct tandem repeats of approximately 500 bp at each terminus (TR). After infection, EBV DNA circularizes via the TR to form the intracellular episomal DNA. To analyze the mechanism of the synthesis of linear DNA through possible replicative intermediates, the terminal fragments were identified in the total intracellular DNA and the covalently closed circular DNA from a productively infected cell line after induction of replication or after treatment with an inhibitor of viral DNA synthesis. These studies indicate that some of the fused terminal fragments detected in the total intracellular DNA are replication-dependent forms which are selectively excluded from the covalently closed circular fraction and are eliminated after treatment with acyclovir. The EBV terminal restriction enzyme fragments were identified in three producer cell lines, each with a characteristic number of TR in the intracellular episomal DNA. Identification of the termini in cell lines established with the three virus strains revealed that the newly transformed cell lines had a greater number of TR than did the template DNA in the producer cell line. The increase in the number of TR in progeny episomes indicates that linear DNA is produced from concatameric replicative intermediates rather than from amplified catenated circular intermediates.