The double-stranded RNA activated protein kinase DAI contains an RNA binding domain consisting of two copies of a double-stranded RNA binding motif. We have investigated the role of RNA structure in the interaction between DAI and the structured single-stranded RNA, adenovirus VA RNAI, which inhibits DAI activation. Mutations in the apical stem, terminal stem, and central domain of the RNA were tested to assess the contribution of these elements to DAI binding in vitro. The data demonstrate that over half a turn of intact apical stem is required for the interaction and that there is a correlation between the binding of apical stem mutants and their ability to function both in vivo and in vitro. There was also evidence of preference for GC-rich sequence in the proximal region of the apical stem. In the central domain the correlation between binding and function of mutant RNAs was poor, suggesting that at least some of this region plays no direct role in binding to DAI, despite its functional importance. Exceptionally, central domain mutations that encroached on the phylogenetically conserved stem 4 of VA RNA disrupted binding, and complementary mutations in this sequence partially restored binding. Measurement of the binding of wild-type VA RNAI to DAI and p20, a truncated form of the protein containing the RNA binding domains alone, under various ionic conditions imply that the major interactions are electrostatic and occur via the protein's RNA binding domain. However, differences between full-length DAI and p20 in their binding to mutants in the conserved stem suggest that regions outside the RNA binding domain also participate in the binding. The additional interactions are likely to be non-ionic, and may be important for preventing DAI activation during virus infection.