The 140,000-Da adenovirus-encoded DNA polymerase (Ad Pol) is required for viral DNA replication both in vitro and in vivo. The polymerase co-purifies in a complex with the 80,000-Da precursor (pTP) of the terminal protein (TP) found covalently attached to the 5' ends of adenovirus DNA. To better understand their function in DNA replication, we have examined the properties of the Ad Pol and the pTP X Ad Pol complex on natural and synthetic DNA templates. The pTP X Ad Pol complex utilizes a variety of homopolymer template-primer combinations including poly(dC) X oligo(dG), poly(dA) X oligo(dT), poly(dT) X oligo(dA), and poly(dT) X oligo(rA). With poly(dT) as template and oligo(rA) or oligo(dA) as primer, DNA synthesis by the pTP X Ad Pol complex is stimulated as much as 100-fold by the 59,000-Da adenovirus DNA-binding protein (Ad DBP). ATP (4 mM) can further increase the rate of DNA synthesis 3- to 10-fold. The Ad DBP does not stimulate the activity of host (HeLa cell) DNA polymerase alpha with poly(dT) X oligo(dA) (or oligo(rA)) as the template-primer, and Escherichia coli single-stranded DNA binding protein cannot substitute for the Ad DBP in the stimulation of the Ad Pol activity. Under optimal conditions, poly(dA) chains 30,000 nucleotides in length are formed indicating that the Ad Pol can be a highly processive enzyme. An exonuclease activity co-sediments with the pTP X Ad Pol complex during glycerol gradient centrifugation, and co-purifies with the 140,000-Da Ad Pol after dissociation of the pTP X Ad Pol complex with urea. The Ad Pol-associated nuclease hydrolyzes single-stranded DNA in a 3'----5' direction and is at least 10-fold more active on single-stranded DNA than on duplex DNA. The Ad Pol has no detectable endonuclease activity on single-stranded DNA or duplex circular DNA. Analysis of the products of the nuclease activity showed that 5'-deoxynucleoside monophosphates were released during the hydrolysis of single-stranded DNA. The Ad DBP inhibits the hydrolysis of DNA by the polymerase-associated nuclease activity.