Tyrosine 222 of MuLV RT is an invariant residue of the highly conserved YXDD motif in the reverse transcriptase class of enzymes. The residue X is Met 184 in HIV-1 RT and Val 223 in MuLV RT. This residue has been implicated in the fidelity of DNA synthesis, whereas the role of the preceding tyrosine in this aspect, as well as in the catalytic mechanism of MuLV RT, remains to be elucidated. We have substituted Tyr 222 with Phe, Ser, and Ala by site-directed mutagenesis and have characterized the properties of the individual mutant enzymes. The results show that Tyr-->Phe substitution did not affect the polymerase activity of the enzyme, while Tyr-->Ser and Tyr-->Ala substitutions significantly reduced the polymerase activity. The pyrophosphorolysis activities of these mutants showed the same trend as the polymerase activities, suggesting an essential role for Y222 in the catalytic mechanism of MuLV RT. One of the most interesting observations of Y-->F substitution was the significantly increased fidelity of DNA synthesis on RNA templates. In addition, a limited extent of ribonucleotide incorporation on RNA template that was consistently noted with the wild-type enzyme was reduced with the Y222F mutant. The resistance to all four ddNTPs, however, persisted in the wild type and Y222 mutants on the RNA template. A ternary complex model of MuLV RT shows that (a) the aromatic ring of Tyr/Phe is positioned between the terminal and penultimate primer bases and (b) the phenolic OH group is seen within hydrogen bonding distance with the base moieties of two template and penultimate primer nucleotides. We propose that the base stacking interaction of Tyr 222 stabilizes the primer terminus position which is essential for the catalytic reaction. However, the weaker stacking interaction of Y compared to F, due to polarization of the pi-charge toward the phenoxyl-OH as well as the resonating character of its H-bond center, may provide slight flexibility to the position of the template base which may be responsible for the error-proneness of MuLV RT.