Ammonium ions stimulated the formation of the phi diameter 29 protein p3-dAMP initiation complex by decreasing the Km value for dATP in a purified system containing the viral terminal protein p3, the viral DNA polymerase p2, and the phi 29 DNA-protein p3 complex as a template. In addition, NH4+ ions stimulated the amount of p3-dAMP complex elongation and increased by about twofold the rate of elongation. The stimulatory effect of NH4+ ions on in vitro phi 29 DNA replication is probably related to the formation of a stable complex between the terminal protein and the DNA polymerase, which was detected only in the presence of NH4+ ions.