The 3'-azido-3'-deoxythymidine (AZT)-resistant pheno type of a heavily mutated human immunodeficiency virus type 1 (HIV-1) reverse transcriptase (RT) carrying a dipeptide (Ser-Ser) insertion between codons 69 and 70 as well as other mutations related to resistance to RT inhibitors has been studied. Recombinant virus carrying this variant RT (termed SS RT) showed reduced susceptibility to all nucleoside RT inhibitors in clinical use, particularly to AZT. In the presence of ATP, recombinant SS RT had an increased ability to remove the 3'-terminal nucleotide from AZT- terminated primers and extend the unblocked primer, compared with wild-type HIV-1 RT (BH10 isolate). Insertion of two serines in the sequence context of BH10 RT did not affect the ATP-dependent phosphorolytic activity of the enzyme, and had no influence in resistance to RT inhibitors. However, SS RT mutants lacking the dipeptide insertion or bearing a four-serine insertion showed reduced ATP-dependent phosphorolytic activity that correlated with increased AZT sensitivity, as determined using a recombinant virus assay. Therefore, the insertion appears to be critical to enhance AZT resistance in the sequence context of multidrug-resistant HIV-1 RT.