Upon infection with bacteriophage T7, a newly isolated mutant strain of Escherichia coli, Y49, produces T7-specific macromolecules including DNA almost normally. However, concatemeric T7 progeny DNA molecules, synthesized in Y49 cells, are later cleaved abnormally, resulting in an accumulation of DNA molecules shorter in size than the T7 genome and a poor production of progeny phage (Y. Yamada, J. Silnutzer, and D. Nakada, J. Mol. Biol. 121:95-111, 1978). The abnormal cutting of concatemeric T7 DNA in Y49 cells is accompanied by a simultaneous accumulation of large amounts of two types of phage head-related particles, proheads and newly found "X particles." Lysates from normal T7 infection of parental cells also contain X particles, although to a lesser amount. Electron microscopic examination of phage head-related particles (i.e., proheads, X particles, and empty heads), gel electrophoretic analysis of proteins in these particles, and kinetic studies on the appearance and fate of these particles suggest that X particles are likely to be intermediary structures between proheads and phage heads probably derived from proheads during the process of T7 DNA packaging. Our data also suggest that empty heads are not precursors to phage heads but are derived from proheads as by-products probably due to an abortive attempt to package T7 DNA. The host mutation in Y49 strain appears to block a step of T7 DNA processing and packaging pathway after generation of X particles from proheads.