Specific interaction between the nucleocapsid protein (N) and the phosphoprotein (P) of vesicular stomatitis virus (VSV), an important step in the life-cycle of the virus, was studied by using a two-hybrid system. Plasmids encoding P fused with the yeast GAL4 DNA-binding domain (pGALP) and N fused with the herpes simplex virus VP16 transactivating region (pVPN) were transfected into CHO cells along with a reporter plasmid encoding chloramphenicol acetyltransferase (CAT). The ability of N and P to associate in vivo was measured by activation of the CAT gene by the VP16 transactivating region. Transfection of plasmids pGALP and pVPN resulted in a high level of CAT activity, indicating that the N and P portions of the fusion proteins associated very strongly with each other. Progressive C-terminal deletions of the P protein revealed two regions that are important for association with the N protein: the N-terminal acidic domain and the C-terminal basic domain. Phosphorylation of P protein was not required for N-P association. Various deletions and mutations of the N protein revealed the C-terminal 5 amino acids (Val-Glu-Phe-Asp-Lys), in particular the amino acids Val-Glu-Phe, to be critical for N association with P. This two-hybrid system can be used in other viral systems to study the interaction between proteins involved in transcription and replication.