4-Hydroxyproline, the characteristic amino acid of collagens and collagen-like proteins in animals, is also found in certain proline-rich proteins in plants but has been believed to be absent from viral and bacterial proteins. We report here on the cloning and characterization from a eukaryotic algal virus, Paramecium bursaria Chlorella virus-1, of a 242-residue polypeptide, which shows distinct sequence similarity to the C-terminal half of the catalytic alpha subunits of animal prolyl 4-hydroxylases. The recombinant polypeptide, expressed in Escherichia coli, was found to be a soluble monomer and to hydroxylate both (Pro-Pro-Gly)(10) and poly(L-proline), the standard substrates of animal and plant prolyl 4-hydroxylases, respectively. Synthetic peptides such as (Pro-Ala-Pro-Lys)(n), (Ser-Pro-Lys-Pro-Pro)(5), and (Pro-Glu-Pro-Pro-Ala)(5) corresponding to proline-rich repeats coded by the viral genome also served as substrates. (Pro-Ala-Pro-Lys)(10) was a particularly good substrate, with a K(m) of 20 microM. The prolines in both positions in this repeat were hydroxylated, those preceding the alanines being hydroxylated more efficiently. The data strongly suggest that P. bursaria Chlorella virus-1 expresses proteins in which many prolines become hydroxylated to 4-hydroxyproline by a novel viral prolyl 4-hydroxylase.