An early expressed operon, located at the right end of the linear bacteriophage phi29 genome, contains open reading frame (ORF)16.7, whose deduced protein sequence of 130 amino acids is conserved in phi29-related phages. Here, we show that this ORF actually encodes a protein, p16.7, which is abundantly and early expressed after infection. p16.7 is a membrane protein, and the N-terminally located transmembrane-spanning domain is required for its membrane localization. The variant p16.7A, in which the N-terminal membrane anchor was replaced by a histidine-tag, was purified and characterized. Purified p16.7A was shown to form dimers in solution. To study the in vivo role of p16.7, a phi29 mutant containing a suppressible mutation in gene 16.7 was constructed. In vivo phage DNA replication was affected in the absence of p16.7, especially at early infection times. Based on the results, the putative role of p16.7 in in vivo phi29 DNA replication is discussed.