phi 29 DNA polymerase shares with other DNA-dependent DNA polymerases several regions of amino acid homology along the primary structure. A conserved amino acid motif, located in the C-terminal portion of the polypeptide and characterized by the amino acid sequence KK(K/R)Y, is conserved in the group of eukaryotic-type DNA polymerases. In the subgroup of DNA polymerases that have a protein-priming mechanism, this motif is restricted to the sequence KXY, X never being a positively charged amino acid. Residues Lys498 and Tyr500 form this conserved motif in phi 29 DNA polymerase. Mutant K498T, in which the positive charge of the motif has been eliminated, was strongly affected both in initiation (terminal protein-dAMP formation, using terminal protein as primer) and DNA polymerization reactions. Mutants K498R and Y500S were able to carry out the initiation reaction to a higher or similar extent, respectively, than wild-type phi 29 DNA polymerase but were affected in DNA polymerization reactions. All of the mutations severely affected the stable binding of the polymerase to a primer-template DNA. In addition, all of the mutant polymerases analyzed in this work showed an unusually strong 3'-5' exonuclease activity both under polymerization or non-polymerization conditions. The results obtained suggest a role of the conserved residues of the KXY motif in stabilizing the primer terminus at the polymerization active site, the positive charge of residue Lys498 being critical for the synthetic activities of phi 29 DNA polymerase.