Integration of the Saccharomyces cerevisiae retrotransposon Ty1 requires the element-encoded integrase (IN) protein, which is a component of cytoplasmic virus-like particles (VLPs). Using purified recombinant Ty1 IN and an oligonucleotide integration assay based on Ty1 long terminal repeat sequences, we have compared IN activity on substrates having either wild-type or altered donor ends. IN showed a marked preference for blunt-end substrates terminating in an A:T pair over substrates ending in a G:C pair or a 3' dideoxyadenosine. VLP activity on representative substrates also showed preference for donor strands which have an adenosine terminus. Staggered-end substrates showed little activity when nucleotides were removed from the end of the wild-type donor strand, but removal of one nucleotide from the complementary strand did not significantly diminish activity. Removal of additional nucleotides from the complementary strand reduced activity to minimal detection levels. These results suggest that the sequence specificity of Ty1 IN is not stringent in vitro. The absence of Ty1 IN-mediated 3' dinucleotide cleavage, a characteristic of retroviral integrases, was demonstrated by using selected substrates. In addition to the forward reaction, both recombinant IN and VLP-associated IN carry out the reverse disintegration reaction with long terminal repeat-based dumbbell substrates. Disintegration activity exhibits sequence preferences similar to those observed for the forward reaction.