An unusual left end (M-end) has been identified on bacteriophage T7 DNA isolated from T7-infected cells. This end has a "hairpin" structure and is formed at a short inverted repeat sequence centered around nucleotide 39,587 of T7, 190 base-pairs to the left of the site where a mature left end is formed on the T7 concatemer. We do not detect the companion right end that would be formed if the M-end is produced by a double-stranded cut on the T7 concatemer. This suggests that the hairpin left end may be generated from a single-stranded cut in the DNA that is used to prime rightward DNA synthesis. The formation of M-end does not require the products of T7 genes 10, 18 or 19, proteins that are essential for the formation of mature T7 ends. During infection with a T7 gene 3 (endonuclease) mutant, phage DNA synthesis is reduced and the concatemers are not processed into unit length DNA molecules, but both M-end and the mature right end are formed on the concatemer DNA. These two ends are also found associated with the large, rapidly sedimenting concatemers formed during a normal T7 infection while the mature left end is present only on unit length T7 DNA molecules. We propose that DNA replication primed from the hairpin end produced by a nick in the inverted repeat sequence provides a mechanism to duplicate the terminal repeat before DNA packaging. Packaging is initiated with the formation of a mature right end on the branched concatemer and, as the phage head is filled, the T7 gene 3 endonuclease may be required to trim the replication forks from the DNA. Concatemer processing is completed by the removal of the 190 base-pair hairpin end to produce the mature left end. © 1990 Academic Press Limited.