5-(2-Chloroethyl)-2'-deoxyuridine (CEDU) is a potent and selective inhibitor of the replication of herpes simplex virus type 1 (HSV-1). CEDU is preferentially phosphorylated by HSV-infected (Vero) cells, as compared with mock-infected cells or cells infected with a thymidine kinase-deficient strain of HSV-1. The end product of this phosphorylation process, CEDU 5'-triphosphate, is a competitive inhibitor of HSV-1 DNA polymerase activity and, to a lesser extent, of cellular DNA polymerase alpha activity. However, in the absence of the natural substrate dTTP, CEDU 5'-triphosphate also serves as an alternative substrate for viral and cellular DNA polymerase. When exposed to HSV-1-infected cells, [2-14C]CEDU was incorporated into both viral and cellular DNA. The extent to which [2-14C]CEDU was incorporated remained approximately constant over a concentration range of 0.5 to 50 microM. Within this concentration range, CEDU effected a concentration-dependent inhibition of viral DNA synthesis that closely paralleled the inhibition of viral progeny formation. It is postulated that CEDU owes (i) its selectivity as an antiviral agent to its preferential phosphorylation by the virus-infected cell and (ii) its antiviral potency to an inhibition of viral DNA synthesis at the level of the viral DNA polymerization reaction.