Adenoviruses code for a protease that is essential for infectivity and is activated by a disulfide-linked peptide, derived from the C terminus of the virus structural protein pVI (pVI-CT). The protease was synthesized at relatively high levels late in infection and was detected in both cytoplasmic and nuclear fractions of adenovirus-infected cells. DNA was not found to be a cofactor of the protease, as previously proposed (W. F. Mangel, W. J. McGrath, D. Toledo, and C. W. Anderson, Nature [London] 361:274-275, 1993), but a role for DNA in facilitating the activation of the protease by pVI-CT in vivo cannot be ruled out. Adenovirus preterminal protein is a substrate for the virus-coded protease, with digestion to the mature terminal protein proceeding via the formation of two intermediates. Each of the three cleavage sites in the preterminal protein was identified by N-terminal sequencing and shown to conform to the substrate specificity of adenovirus protease, (M,L,I)XGX-X. Functional studies revealed that preterminal protein and intermediates but not mature terminal protein associated with adenovirus polymerase, while only the intact preterminal protein and none of its digestion products bound to DNA. These results suggest that the virus-coded protease may influence viral DNA replication by cleavage of both genome-bound and freely soluble preterminal protein, with consequent alterations to their functional properties.