We report that Chlorella virus PBCV-1 encodes a 298-amino-acid ATP-dependent DNA ligase. The PBCV-1 enzyme is the smallest member of the covalent nucleotidyl transferase superfamily, which includes the ATP-dependent polynucleotide ligases and the GTP-dependent RNA capping enzymes. The specificity of PBCV-1 DNA ligase was investigated by using purified recombinant protein. The enzyme catalyzed efficient strand joining on a singly nicked DNA in the presence of magnesium and ATP (Km, 75 microM). Other nucleoside triphosphates or deoxynucleoside triphosphates could not substitute for ATP. PBCV-1 ligase was unable to ligate across a 2-nucleotide gap and ligated poorly across a 1-nucleotide gap. A native gel mobility shift assay showed that PBCV-1 DNA ligase discriminated between nicked and gapped DNAs at the substrate-binding step. These findings underscore the importance of a properly positioned 3' OH acceptor terminus in substrate recognition and reaction chemistry.