Two new sesquiterpene hydroquinones, peyssonol A and peyssonol B, of the Red Sea algae Peyssonelia sp., have been shown to be potent inhibitors of the RNA-directed DNA synthesis of the reverse transcriptases (RTs) of human immunodeficiency virus (HIV)-1 and HIV-2. The DNA-dependent DNA polymerase activity is inhibited to a lesser extent, whereas the RNase H activity is unaffected. The inhibition of the DNA polymerase activities is independent of the nature of the template primers used. Peyssonol A probably binds the RT at a site distinct from those occupied by the substrates of the RNA-directed DNA synthesis, since the mode of inhibition is noncompetitive with respect to both dNTP's and template primer. This is partially true for peyssonol B, which is noncompetitive with respect to only dNTP, but is competitive with respect to the template primer. We have speculated that, since peyssonol B and the template primer bear no apparent structural resemblance, the competitive pattern of inhibition can be explained by an indirect steric hindrance or by the overlap of the inhibitor and the substrate distinct binding sites of the enzyme. Alternatively, the binding of the inhibitor to a distinct site induces conformational changes that distort the binding of the template primer. Furthermore, we have shown that both peyssonol A and peyssonol B interfere with the direct binding of the RT to the template primer, offering an explanation for the mechanism of the enzyme inhibition. The insensitivity of DNA polymerase beta and the poor response of DNA polymerase alpha to peyssonol A make this inhibitor more attractive for the future development of a potent anti-HIV RT drug.