Replication of a replicative form DNA of bacteriophage phi X174 initiates by rolling-circle synthesis of the viral DNA followed by discontinuous synthesis of the complementary DNA. Gene C protein of phi X174, which is involved in DNA packaging, inhibits the rolling-circle DNA synthesis by binding to the initiation complex in vitro. The gene C protein-associated initiation complex can synthesize and package the viral DNA to produce infectious phage when supplemented with phi X174 gene J protein and the prohead. Multiple rounds of phage synthesis occur without dissociation of the gene C protein from the complex. These results indicate that gene C protein is central in the switch from replication of a replicative form DNA to synthesis and concomitant packaging of viral DNA into phage capsid, which occurs in the late stage of infection.