The unusually high error rate of human immunodeficiency virus type 1 reverse transcriptase (HIV-1 RT) suggests that polymerization errors by this enzyme contribute to the genetic variability of the AIDS virus. We have analyzed the mechanism for HIV-1 RT infidelity by studying two distinct steps that might lead to base substitution mutations: nucleotide misinsertions and elongation from 3'-terminal DNA mispairs. Our results indicate that the capacity of HIV-1 RT to polymerize nucleotides onto mispaired termini is a major factor in the production of mutations by this enzyme. When a noncomplementary dAMP was inserted opposite a template adenine by HIV-1 RT, the nascent 3'-terminal A.A mispair was readily extended by subsequent incorporation of the next complementary nucleotide. The frequencies of nucleotide addition onto 3'-terminal A-A, A-C, and A-G mispairs were determined by quantitating the amount of extended primers with a gel electrophoresis assay and by measuring mutagenesis after hybridization of mismatched primers opposite an amber mutation in bacteriophage phi X174 DNA. The mispair extension frequencies are approximately 50-fold higher by HIV-1 RT than by the mammalian replicative enzyme DNA polymerase alpha.