The reovirus capsid protein sigma 3 was examined for double-stranded RNA (dsRNA)-binding activity by Northwestern (RNA-protein) blot analysis. Treatment of virion-derived sigma 3 protein with Staphylococcus aureus V8 protease led to an increase in the dsRNA-binding activity associated with the C-terminal fragment of the protein. Recombinant C-terminal fragments of the sigma 3 protein were expressed in Escherichia coli from the S4 cDNA of reovirus serotype 1. These truncated sigma 3 proteins displayed proteolytic processing and dsRNA-binding activity similar to those observed for native, virion-derived sigma 3 protein as measured by Northwestern blot analysis. Construction of a modified pET3c vector, pET3Exo, allowed the production of 3'-terminal deletions of the S4 cDNA by using exonuclease III and rapid screening of the induced truncated sigma 3 proteins. An 85-amino-acid domain within the C-terminal portion of the sigma 3 protein which was responsible for dsRNA-binding activity was identified. The 85-amino-acid domain possessed a repeated basic amino acid motif which was conserved in all three serotypes of reovirus. Deletion of one of the basic motifs, predicted to be an amphipathic alpha-helix, destroyed dsRNA-binding activity.