Bacteriophage phi 29 is typical of double-stranded DNA viruses in that its genome is packaged into a preformed procapsid during viral assembly. An intriguing feature of phi 29 is the presence of a 120-base virus-encoded RNA (pRNA) that is indispensable for DNA packaging. Phylogenetic comparison of similar RNAs in numerous phages has revealed that the secondary structure of the pRNA is well conserved. Computer analysis predicts the presence of an extensive segment of helix with three single-base bulges generated by the pairing of the 5' and 3' ends. The desire to understand the role played by the pRNA in DNA packaging has led to a mutational analysis of the 5'-/3'-terminal region, which is believed to be important in DNA translocation. Deletion of 3 bases from the 3' end of the RNA, shortening the pRNA from 120 to 117 bases, was tolerated without loss of activity, but additional deletion of the base 117 resulted in 100-fold less activity, and a 115-base pRNA was virtually nonfunctional. Additionally, the three unpaired one-base bulges within the helical stretches of the paired proximate ends were nonessential for pRNA activity, as demonstrated by deletion of the bulge individually. An extensive series of helix disruptions by single- and multiple-base substitution almost invariably led to the loss of DNA packaging activity. Additional mutations that restored predicted base pairings rescued pRNA activity. This second site suppression confirmed that the 5'- and 3'-end region was paired and was indeed a helical stretch. The secondary structure was of greater importance than the primary sequence, with the exception of the requirement of an adenine at either the third or fourth position. The specific requirement of an adenine in phi 29 pRNA at this position, as well as conservation of this position in other phage pRNAs, implicates that this base may play a special role in either the DNA-packaging reaction or the maintenance of the pRNA tertiary structure.