This review focuses on the biochemical, biophysical, and catalytic properties of terminase, an enzyme involved in bacteriophage lambda genome packaging. The holoenzyme possesses ATPase, DNA strand-separation, and site-specific nuclease activities that work in concert to insert a viral genome into the confines of a performed capsid. Moreover, the terminase subunits are part of a series of nucleoprotein complexes involved in genome packaging, including remarkably stable intermediates that transition to a highly mobile DNA packaging 'machine.' Models for the assembly and interconversion of these complexes are presented. Interactions between the catalytic sites in the enzyme complex, and modulation of these catalytic activities as it relates to the assembly and relative stability of the packaging intermediates are discussed. This ordered progression of nucleoprotein intermediates is a common theme in biology as demonstrated by mechanistic similarities between viral DNA packaging, the initiation of chromosomal replication, and the initiation of transcription. Terminase is thus part of a growing number of examples of biological 'machines' or molecular 'motors.'