The terminase holoenzyme of bacteriophage lambda is a multifunctional protein composed of two subunits, gpNu1 and gpA In vitro, under certain conditions, terminase can render DNAs from various sources, of varying lengths and termini, resistant to degradation by high concentrations of DNase I. This reaction is completely dependent on the presence of terminase, proheads, a hydrolyzable triphosphate, and a divalent metal ion, and we propose that it is the result of translocation of DNA into proheads by terminase. This reaction is stoichiometric with respect to terminase, DNA, and proheads and can be supported by all deoxyriboand ribonucleoside triphosphates, but not by the corresponding diphosphates or nonhydrolyzable ATP analogs. Mg2+ and Ca2+ promote the reaction, but Mn2+ and Zn2+ do not. In the absence of spermidine, translocase activity is low, but addition of the Escherichia coli protein integration host factor (IHF) promotes specific translocation of only those DNA fragments containing the terminase-binding site, cosB. When spermidine is present, nonspecific translocation of DNA from any source is stimulated. Under these conditions IHF no longer promotes specificity, but translocation of only cosB-containing DNA fragments can be restored by addition of small amounts of a dialyzed and RNase-treated E. coli extract, suggesting that additional host factor(s) may be involved in determination of packaging specificity. To a limited extent, gpA alone can promote translocation, but gpNu1, which has no translocase activity on its own, must be added to approach the holoenzyme-like activity levels. Formation of viable phage cannot be accomplished by gpA in the absence of gpNu1.