A system that replicates bacteriophage phi 29 DNA with protein p3 covalently attached to the two 5' ends, using as the only proteins the phi 29 DNA polymerase and the terminal protein, is described. Restriction analysis of the 32P-labeled DNA synthesized in vitro showed that all phi 29 DNA fragments were labeled. Analysis by alkaline sucrose gradient centrifugation of the DNA labeled during a 10-min pulse showed that, after a 20-min chase, about half of the DNA molecules had reached apparently full-length phi 29 DNA (approximately equal to 18,000 nucleotides). Ammonium ions strongly stimulated phi 29 DNA-protein p3 replication, the effect being due to stimulation of the initiation reaction. ATP was not required for phi 29 DNA-protein p3 replication, either in the initiation or elongation steps. The results show that the phi 29 DNA polymerase functions, not only in the formation of the p3-dAMP covalent initiation complex but also in the elongation of the latter, as the only DNA polymerase to produce full-length phi 29 DNA.