Drug resistance-associated mutations in HIV-1 reverse transcriptase (RT) can affect the balance between polymerase and ribonuclease H (RNase H) activities of the enzyme. We have recently demonstrated that the N348I mutation in the connection domain causes selective dissociation from RNase H-competent complexes, whereas the functional integrity of the polymerase-competent complex remains largely unaffected. N348I has been associated with resistance to the non-nucleoside RT inhibitor (NNRTI), nevirapine; however, a possible mechanism that links changes in RNase H activity to changes in NNRTI susceptibility remains to be established. To address this problem, we consider recent findings suggesting that NNRTIs may affect the orientation of RT on its nucleic acid substrate and increase RNase H activity. Here we demonstrate that RNase H-mediated primer removal is indeed more efficient in the presence of NNRTIs; however, the N348I mutant enzyme is able to counteract this effect. Efavirenz, a tight binding inhibitor, restricts the influence of the mutation. These findings provide strong evidence to suggest that N348I can thwart the inhibitory effects of nevirapine during initiation of (+)-strand DNA synthesis, which provides a novel mechanism for resistance. The data are in agreement with clinical data, which demonstrate a stronger effect of N348I on susceptibility to nevirapine as compared with efavirenz.