The human immuno deficiency virus type 1 nucleocapsid protein 7 (HIV-1 NCp7) is a major component of the reverse transcription complex. Its effect on reverse transcription and homologous recombination has been studied in vitro under strictly identical experimental conditions. For high enzyme concentrations, NCp7 did not stimulate DNA synthesis. The time-course for completion of reverse transcription as well as the processivity and the pattern of pausing were similar in the presence or absence of NCp7. However, the addition of NCp7 significantly affected the yield of the reaction, a decrease exacerbated as the length of the copied RNA increased. We attribute this phenomenon to a destabilization of the RNA/DNA duplex at intermediate stages of reverse transcription.In contrast, NCp7 enhanced homologous recombination during synthesis mediated by HIV-1 RT (reverse transcriptase), as it did for Moloney murine leukemia virus RT. On naked RNA the process of recombination was dependent on the concentration of RT, suggesting that binding of RT to an intermediate of strand transfer was the limiting step. This dependence was relieved in the presence of NCp7. This effect does not imply a direct interaction between RT and NCp7, since similar results were obtained when NCp7 was substituted by the bacterial RNA chaperon StpA. The dominant effect of NCp7 is therefore most probably exerted at the level of condensation of the RNA templates, leading to the formation of productive interactions between the nascent DNA and the acceptor template.