Previous studies have shown that the reovirus lambda 1 core protein harbors a putative nucleotide-binding motif and exhibits an affinity for nucleic acids, In addition, a nucleoside triphosphate phosphohydrolase activity present in reovirus cores has been recently assigned to hi using gene reassortment analysis. In this study, it was demonstrated that the recombinant lambda 1 protein, expressed in the yeast Pichia pastoris, is able to hydrolyze nucleoside 5'-biphosphates or deoxynucleoside 5'-triphosphates. This activity was absolutely dependent on the presence of a divalent cation, Mg2+ or Mn2+. The protein can also unwind double-stranded nucleic acid molecules in the presence of a nucleoside 5'-triphosphate or deoxynucleoside 5'-triphosphate. These results provide the first biochemical evidence that the reovirus lambda 1 protein is a nucleoside triphosphate phosphohydrolase/helicase and strongly support the idea that lambda 1 participates in transcription of the viral genome.