Empty particles of the L-A dsRNA virus of Saccharomyces cerevisiae bind to added viral (+) strands and convert them to dsRNA (RNA replication) in an in vitro reaction that is dependent on host factors. X dsRNA (530 bp long) is a deletion derivative of L-A dsRNA (4.5 kb). By modifying our cDNA clone of X and testing template activity of T7 RNA polymerase transcripts, we have found that both the 3' end 30 bases and an internal site on the (+) strand are necessary for optimal replication [in vitro (-) strand synthesis]. Changing any one of the 3' terminal three bases eliminates template activity, but the 3' terminal five bases of M1 (a satellite virus of L-A) can replace the 3' terminal four bases of X. A subterminal stem-loop structure is also important for template activity. The internal site that enhances replication is approximately 400 bp from the 3' end and is distinct from the site necessary for binding of (+) strands to the empty viral particles.