Replication in vitro of the replicative form (RF) I DNA of bacteriophage varphiX174 requires the phage-induced cistron A (cisA) protein, the host rep protein, DNA-binding protein, ATP, and DNA polymerase III plus replication factors. The rep protein is a single-stranded DNA-dependent ATPase. In this paper we show that varphiX174 RF I DNA cut by the cisA protein acts as a duplex DNA cofactor for the rep protein ATPase activity, provided that DNA-binding protein is present. In this latter reaction the duplex DNA is unwound by the rep protein with concomitant hydrolysis of ATP. The extents of ATP hydrolysis, DNA unwinding, and, where appropriate, DNA synthesis are proportional to the amounts of DNA-binding protein present. Two ATP molecules are hydrolyzed per base pair unwound. We propose that the obligatory requirement for the cisA protein in the unwinding of varphiX174 RF I DNA is not simply due to its endonuclease activity but rather is due to its provision of a site for the binding of the rep protein. The rep protein in the presence of DNA-binding protein, but in the absence of cisA protein, unwinds duplex DNA when one strand extends to generate a single-stranded leader region preceding the duplex. We show that rep protein translocates along the leader single strand in a 5'-to-3' direction only and then invades the duplex DNA. The rep protein shows a directional specificity for translocation and unwinding. A model is presented to explain the mechanism of DNA unwinding catalyzed by the rep protein.