DNA polymerase III holoenzyme was assembled from pure proteins onto a primer template scaffold. The assembly process could be divided into two stages. In the time-consuming first stage, beta subunit and gamma.delta subunit complex were required in forming a tightly bound ATP-activated "preinitiation complex" with a single-stranded DNA bacteriophage circle uniquely primed with a synthetic pentadecadeoxyribonucleotide. This finding substantiates an earlier study using crude protein preparations in a homopolymer system lacking Escherichia coli single-stranded DNA binding protein (Wickner, S. (1976) Proc. Natl. Acad. Sci. U. S. A. 73, 3511-3515). In the second stage, the polymerase III core and the tau subunit rapidly seek out and bind the preinitiation complex to form DNA polymerase III holoenzyme capable of rapid and entirely processive replication of the circular DNA. ATP is not required beyond formation of the preinitiation complex. It is remarkable that the fully assembled DNA polymerase III holoenzyme is so stably bound to the primed DNA circle (4-min half-time of dissociation), yet upon completing a round of synthesis the polymerase cycles within 10 s to a new preinitiation complex on a challenge primed DNA circle. Efficient polymerase cycling only occurred when challenge primed DNA was endowed with a preinitiation complex implying that cycling is mediated by a polymerase subassembly which dissociates from its accessory proteins and associates with a new preinitiation complex. These subunit dynamics suggest mechanisms for polymerase cycling on the lagging strand of replication forks in a growing chromosome.