Human immunodeficiency virus (HIV) nucleocapsid protein (NC) influences HIV reverse transcriptase (RT) catalyzed strand transfer synthesis from internal regions of natural sequence RNA. In the strand transfer assay reaction in vitro, primer synthesis initiated on a donor template can transfer and be completed on an acceptor template. NC was added at concentrations up to twice that needed for 100% template coating. As the concentration of NC was increased, primer extension was stimulated until NC coated approximately 50% of the template. Stimulation was caused in part by an increase in the number of primers that sustained synthesis. Subsequent increments of NC decreased synthesis. The presence of NC also increased the efficiency of the strand transfer reaction, allowing a greater proportion of extended primers to transfer from donor to acceptor templates. Processivity of the RT on the donor template was measured using both challenged and enzyme dilution assays. NC did not alter the proportion of synthesis products that reached the end of the template, indicating little effect on processivity. This result suggests that the increase in full-length product synthesis, observed in reactions where the RT repeatedly bound the primer-template, resulted from promotion of RT reassociation by NC. Consequently, since the RT could not reassociate with the template in the processivity assay, NC could not stimulate the amount of full-length synthesis. No strand transfer was observed in dilution processivity assays, suggesting that the RT must dissociate and rebind during the transfer reaction. Stimulation of synthesis, e.g. by increased dNTP concentration, normally inhibits strand transfer. Stimulation of both synthesis and transfer by NC indicates that properties of NC that improve the transfer event prevail over the negative effects of rapid synthesis on transfer efficiency.