Metal ions are essential for DNA polymerase and RNase H activities of HIV-1 reverse transcriptase (RT). RT studies are routinely performed at 6-8 mM Mg2+, despite the fact that the in vivo concentration might be as low as 0.2 mM. We studied the influence of MgCl2 and ATP, which likely binds a significant fraction of the magnesium pool in vivo, on the DNA polymerase and RNase H activities of HIV-1 RT, its inhibition by nucleoside RT inhibitors (NRTIs) and primer unblocking by AZT-resistant RT. At low Mg2+ concentration, reverse transcription of a natural template strongly increased despite a dramatically reduced intrinsic polymerase activity under such conditions. Low Mg2+ concentrations affected the RNA stability and indirectly decreased its degradation by the RNase H activity. The reduced RNA degradation prevented premature dissociation of the template and primer strands that otherwise generated dead-end DNA products. In addition, low Mg2+ dramatically decreased the incorporation of NRTIs into DNA and increased nucleotide excision by AZT-resistant RT. The latter effect is also most likely owing to the diminished cleavage of the RNA template. Thus, differences in the free Mg2+ concentration between different cell types or during the cell cycle might strongly affect HIV-1 replication and its inhibition.