Replication of the lagging strand of bacteriophage T7 DNA occurs in a discontinuous fashion that requires RNA-primed DNA synthesis, the removal of the RNA primers, the replacement of the ribonucleotides with deoxyribonucleotides, and the covalent joining of adjacent DNA fragments. We have examined each of these steps as well as the whole process through the use of model substrates and partial reactions using purified proteins. Tetraribonucleotides (pppACCC or pppACCA), synthesized by the T7 gene 4 protein on single-stranded DNA, are used as primers by T7 DNA polymerase to yield RNA-terminated DNA fragments. The removal of the RNA primers is catalyzed by the 5' to 3' hydrolytic activities of either Escherichia coli DNA polymerase I or the T7 gene 6 exonuclease. The products of hydrolysis are pppApC, ATP, and nucleoside 5'-monophosphates or ATP and nucleoside 5'-monophosphates, respectively. The requirement for DNA synthesis to fill the gap between adjacent DNA fragments can be fulfilled by Form II of T7 DNA polymerase but not by Form I. DNA synthesis catalyzed by Form II of T7 DNA polymerase eliminates gaps to create a substrate for DNA ligase whereas strand displacement synthesis catalyzed by Form I creates an aberrant structure that cannot be joined. Either the host or phage DNA ligase can effect the final covalent joining. All steps in the replication of a lagging strand have been coupled in a model system that catalyzes the formation of covalently closed, circular, double-stranded DNA molecules using single-stranded viral DNA as template. A combination of four bacteriophage proteins, gene 4 protein, Form II of T7 DNA polymerase, gene 6 exonuclease, and DNA ligase, can accomplish this overall reaction.