Using a synthetic 66 nucleotide RNA template containing a stable hairpin structure derived from the HIV-1 genome, six predominant RNA cleavage products are found during DNA synthesis catalyzed by HIV-1 RT. These major RNA cleavage sites correlate well with the pause sites seen during primer elongation [Suo, Z., & Johnson, K. A. (1997) Biochemistry (manuscript submitted for publication)]. Thus, the RNase H and polymerase activities of RT are coupled as RT reads through the RNA secondary structure. The distance between the two active sites of HIV-1 RT is 19-20 base pairs of DNA/RNA heteroduplex when the next template base is not paired. The heteroduplex region was enlarged by 2-3 base pairs once RT encounters the template hairpin. A model for this change is presented. At the pause sites, the burst amplitudes of RNA cleavage are larger than the corresponding reaction amplitudes of next nucleotide incorporation at the polymerase site. Measurement of the steady state rates of RNA cleavage confirms that all substrates dissociate slowly from RT. These results suggest that while substrates are bound nonproductively at the polymerase site, they are still bound productively at the RNase H active site of RT. Characterization of an RNase H-deficient RT mutant (D443N) shows that RNase H activity is not critical for RT to read through the RNA secondary structure. HIV-1 nucleocapsid does not increase the processivity of HIV-1 RT but inhibits DNA elongation by blocking the binding of RT to DNA substrates.