The effects of O6-methylguanine on the reactions involved in initiation of DNA replication were investigated by measuring the interactions of SV40 T antigen with oligonucleotides substituted with the methylated base. O6-Methylguanine residues were positioned in either binding site I or binding site II of the SV40 origin of replication. Binding of purified T antigen, measured by both nitrocellulose filter binding and delayed oligonucleotide migration, was unaffected by the presence of seven methylated bases in binding site II. Single substitutions within binding site I were sufficient to inhibit T-antigen binding, and the extent of inhibition was dependent on the position of O6-methylguanine in the DNA sequence. Unwinding by T antigen was analyzed by measuring displacement of a single-stranded oligonucleotide from similarly substituted, partially duplex substrates. The presence of three O6-methylguanine residues in binding site I facilitated the helicase activity of T antigen. In contrast, single O6-methylguanine bases inhibited unwinding. A correlation was observed between the position of the methylated base and the inhibition of both binding and unwinding by T antigen.