Blocked and methylated 5' termini of reovirus mRNA are formed by viral cores at an early stage of transcription. Cores incubated in a complete transcription reaction mixture for 30 s, or in a mixture lacking UTP and ATP for a longer time, synthesize the "cap" structure, m7GpppGmpC. The dinucleotide ppGpC functions as substrate for a core-associated guanylyltransferase and is converted to GpppGpC by addition of pG from GTP. For optimal conversion, both the diphosphate terminus and phosphodiester bond are required. pGpC is not a substrate, but pppGpC is utilized after removal of the gamma-phosphate by a core nucleotide phospohydrolase. Methyltransferases also present in cores transfer methyl groups sequentially from S-adenosylmethionine (AdoMet) to the N7-position of the 5'-terminal guanosine followed by the 2'-OH of the penultimate guanosine. GpppGpC is hydrolyzed by cores in the presence of pyrophosphate to ppGpC, the predominant 5'-terminal structure of reovirus mRNA made in the absence of S-adenosylmethionine. N7-methylation prevents pyrophosphorolysis of m7GpppGpC, which may explain the increased proportion of blocked, methylated 5' termini in viral mRNA synthesized in the presence of S-adenosylmethionine. On the basis of these findings, the following reaction series is proposed for the synthesis of reovirus mRNA caps. In the series, AdoHcy is the abbreviation for S-adenosylhomocysteine (see article)9