Escherichia coli RNase H has a basic extension that is involved in binding nucleic acid substrates. This basic extension is present in the RNase H of Moloney murine leukemia virus reverse transcriptase (MLV RT), but has been deleted from the RNase H of HIV-1 RT. Previous work showed that removing the basic loop from MLV RT (the mutant is called DeltaC) blocked viral replication; however, DeltaC MLV RT retained RNase H activity in an in situ gel assay. We prepared recombinant DeltaC MLV RT and compared its activity to wild-type MLV RT. The DeltaC mutant is impaired in both polymerase and RNase H activity; the pattern of defects suggests that the basic loop is involved in the binding of MLV RT to a heteropolymeric template-primer.