Efavirenz is a non-nucleoside reverse transcriptase inhibitor used for treating HIV/AIDS. We found that polymerization activity of a reverse transcriptase (RT) with the E478Q mutation that inactivates the RNase H catalytic site is much more sensitive to efavirenz than wild-type RT, indicating that a functional RNase H attenuates the effectiveness of efavirenz. Moreover, efavirenz actually stimulated wild-type RNase H binding and catalytic functions, indicating another link between efavirenz action and RNase H function. During reverse transcription in vivo, the RT that is extending the DNA primer also periodically cleaves the genomic RNA. The RNase H makes primary template cuts ~18 nucleotides from the growing DNA 3'-end, and when the RT pauses synthesis, it shifts to make secondary cuts ~9 nucleotides from the DNA 3'-end. After synthesis, RTs return to bind the remaining template RNA segments at their 5'-ends and make primary and secondary cuts, 18 and 9 nucleotides in, respectively. We found that efavirenz stimulates both 3'- and 5'-directed RNase H activity. Use of specific substrates revealed a particular acceleration of secondary cuts. Efavirenz specifically promoted binding of the RT to RNase H substrates, suggesting that it stabilizes the shifting of RTs to make the secondary cuts. We further showed that efavirenz similarly stimulates the RNase H of an RT from a patient-derived virus that is highly resistant and grows more rapidly in the presence of low concentrations of efavirenz. We suggest that for efavirenz-resistant RTs, stimulated RNase H activity contributes to increased viral fitness.