We have analysed the mechanism of ribonuclease H (RNaseH) induced cleavage of a defined RNA-DNA hybrid by human immuno-deficiency virus (HIV-1) reverse transcriptase (RT). An in vitro transcribed RNA labelled at the 3' end was hybridized to a pentadecameric DNA oligonucleotide complementary to an internal region of the RNA. Upon incubation of this RNA-DNA hybrid with recombinant p66 or p66/p51 HIV-1 reverse transcriptase, RT-RNaseH mediated cleavage is observed at most nucleotides within the short hybridized stretch, resulting in a spectrum of RNA fragments extending from the 3' label to this region and differing in length by one nucleotide. The same RNA, this time labelled at the 5' end, yields only one or two major cleavage products corresponding to RNA species extending from the 5' label to the middle of the hybridized region. Such a result can be explained by the action of both endonuclease and 3'----5' exonuclease activities inherent to the C-terminal domain of p66 RT. To investigate how RNaseH cleavage is coupled to reverse transcription, a combination of deoxynucleoside triphosphates was used which allowed controlled extension of the primer DNA. Concomitantly with the elongation of the oligonucleotide primer, RNaseH cleavage proceeds towards the 5' end of the RNA with identical increments, suggesting a simultaneous action of both activities.