Homogeneous preparations of phage T7 gene 4 protein catalyze the hydrolysis of dNTPs and rNTPs to NDPs and Pi in the presence of single-stranded DNA. Synthesis on single-stranded DNA by T7 DNA polymerase (DNA nucleotidyltransferase; deoxynucleosidetriphosphate:DNA deoxynucleotidyltransferase, EC 2.7.7.7) does not affect the hydrolysis of NTPs by the gene 4 protein. Gene 4 protein does not catalyze the hydrolysis of NTPs in the presence of duplex DNA, nor can T7 DNA polymerase use duplex DNA as a template. However, the two proteins together can replicate duplex DNA and, under these conditions, synthesis is accompanied by hydrolysis of NTPs. During synthesis on duplex templates in the presence of T7 DNA polymerase, gene 4 protein, dNTPs, and rNTPs, 4.2 NTPs are hydrolyzed for each dNMP polymerized. 2'3'-Dideoxy-TTP, an inhibitor of DNA synthesis, inhibits hydrolysis by the gene 4 protein during synthesis on duplex DNA, and beta, gamma-methylene-dTTP, an inhibitor of hydrolysis by the gene 4 protein, stops DNA synthesis on duplex DNA. The multiple activities of gene 4 protein are shown to reside in a single protein molecule.