Terminase enzymes are common to both eukaryotic and prokaryotic double-stranded DNA viruses. These enzymes possess ATPase and nuclease activities that work in concert to "package" a viral genome into an empty procapsid, and it is likely that terminase enzymes from disparate viruses utilize a common packaging mechanism. Bacteriophage lambda terminase possesses a site-specific nuclease activity, a so-called helicase activity, a DNA translocase activity, and multiple ATPase catalytic sites that function to package viral DNA. Allosteric interactions between the multiple catalytic sites have been reported. This study probes these catalytic interactions using enzyme kinetic, photoaffinity labeling, and vanadate inhibition studies. The ensemble of data forms the basis for a minimal kinetic model for lambda terminase. The model incorporates an ADP-driven conformational reorganization of the terminase subunits assembled on viral DNA, which is central to the activation of a catalytically competent packaging machine. The proposed model provides a unifying mechanism for allosteric interaction between the multiple catalytic sites of the holoenzyme and explains much of the kinetic data in the literature. Given that similar packaging mechanisms have been proposed for viruses as dissimilar as lambda and the herpes viruses, the model may find general utility in our global understanding of the enzymology of virus assembly.