Amino acids Tyr254 and Tyr390 of phi 29 DNA polymerase belong to one of the most conserved regions in eukaryotic-type DNA polymerases. In this paper we report a mutational study of these two residues to address their role in nucleotide selection. This study was carried out by means of a new kinetic analysis that takes advantage of the competition between DNA polymerization and 3'-->5' exonuclease activity to measure the Km values for correct and incorrect nucleotides in steady-state conditions. This method is valid for any 3'-->5' exonuclease-containing DNA polymerase, without any restriction concerning catalytic rates of nucleotide incorporation. The results showed that the discrimination factor achieved by phi 29 DNA polymerase in the nucleotide binding step of DNA polymerization is 2.4 x 10(3), that is, a wrong nucleotide is bound with a 2.4 x 10(3)-fold lower affinity than the correct one. Mutants Y254F, Y390F, and Y390S showed discrimination values of 7.0 x 10(2), > 1.9 x 10(3), and 2.9 x 10(2), respectively. The reduced accuracy of nucleotide binding produced by mutations Y254F and Y390S lead us to propose that phi 29 DNA polymerase residues Tyr254 and Tyr390, highly conserved in eukaryotic-type DNA polymerases, are involved in nucleotide binding selection, thus playing a crucial role in the fidelity of DNA replication. Comparison of the discrimination factors of mutants Y390S and Y390F strongly suggests that the phenyl ring of Tyr390 is directly involved in checking base-pairing correctness of the incoming nucleotide.