Retroviral DNA integration involves a coordinated set of DNA cutting and joining reactions. We find that the IN protein of Moloney murine leukemia virus (MoMLV) is the only viral protein required to accomplish these reactions in vitro. IN protein has a site-specific nuclease activity that cleaves 2 nucleotides from the sequence present at the 3' ends of MoMLV DNA made by reverse transcription. This reaction generates the recessed 3' ends that are normal precursors for integration. IN protein also possesses the integration activity that joins these recessed 3' ends of the viral DNA to a staggered cut, made by IN protein, in the target DNA. Short duplex oligonucleotides, corresponding to the ends of MoMLV DNA, serve as the viral DNA substrate for both the cleavage and integration reactions; there are no special requirements for the DNA that acts as the target for integration. The reaction products are detected by a direct physical assay.