The dgt gene of Escherichia coli encodes a deoxyguanosine triphosphate triphosphohydrolase (dGTPase) that hydrolyzes dGTP to deoxyguanosine and tripolyphosphate. The enzyme is highly specific for dGTP which is hydrolyzed with a Km of 2-5 microM. Nitrocellulose filter binding assays demonstrate that, under physiological salt conditions, dGTPase binds with apparent cooperativity to single-stranded DNA with an association constant of 7.7 x 10(6) M-1. In the presence of NaCl, dGTPase binds weakly to double-stranded DNA. In the absence of NaCl, dGTPase binds both single- and double-stranded DNA with an association constant of 1 x 10(7) M-1. The dGTPase-double-stranded DNA complex, however, is readily dissociated with NaCl. Divalent cations such as Mg2+ or Mn2+ enhance, but are not required for DNA binding. The presence of dGTP or GTP does not effect the ability of dGTPase to bind DNA. dGTPase binds to oligonucleotides of length 17-35, but with lower affinities. The homopolymers poly(dT) and poly(rU) act as effective competitors of single-stranded DNA for binding to dGTPase. The bacteriophage T7 gene 1.2 protein, which specifically inhibits the enzymatic activity of dGTPase, also prevents dGTPase from binding to single-stranded DNA. dGTPase inhibits the activity of T7 DNA polymerase on a poly(dA)-oligo(dT) template. This inhibition is reversed by prior incubation of dGTPase with the T7 gene 1.2 protein.