DNA polymerase III holoenzyme (holoenzyme), the multiprotein replicase of Escherichia coli, is essentially unlimited in processive DNA synthesis. Processive activity can be reconstituted from two components. One component, the beta preinitiation complex, is a beta dimer clamped onto primed DNA. The beta preinitiation complex is formed by the five-protein gamma complex, which hydrolyzes ATP to chaperone beta onto primed DNA. The other component is the alpha epsilon polymerase. The alpha epsilon polymerase itself is not processive, but is endowed with extremely high processive activity upon assembly with the beta preinitiation complex. Here we examine the mechanism by which the beta preinitiation complex confers processivity onto the alpha epsilon polymerase. We find the beta preinitiation complex to be mobile on DNA. Diffusion of beta on DNA is specific to duplex DNA, is bidirectional, does not require ATP, and appears to diffuse linearly along the duplex. Furthermore, beta directly binds the alpha epsilon polymerase through contact with alpha, the DNA polymerase subunit. Hence, the high processivity of the holoenzyme is rooted in a "sliding clamp" of beta on DNA that tethers the polymerase to the primed template. Implications for transcription and translation are discussed.