Rep-mediated nicking of the adeno-associated virus origin requires two biochemical activities, DNA helicase activity and transesterification.

The single-stranded adeno-associated virus (AAV) genome is flanked by terminal hairpinned origins of DNA replication (terminal repeats [TRs]) that are nicked at the terminal resolution site (trs) by the AAV Rep protein in an ATP-dependent, site-specific manner. Here we determine the minimal trs sequence necessary for Rep cleavage, 3'-CCGGT/TG-5', and show that this 7-base core sequence is required only on the nicked strand. We also identify a potential stem-loop structure at the trs. Interestingly, Rep nicking on a TR substrate that fixes this trs stem-loop in the extruded form no longer requires ATP. This suggests that ATP-dependent Rep helicase activity is necessary to unwind the duplex trs and extrude the stem-loop structure, prior to the ATP-independent Rep transesterification reaction. The extrusion of origin stem-loop structures prior to nicking appears to be a general mechanism shared by plant and animal viruses and bacterial plasmids. In the case of AAV, this mechanism of TR nicking would provide a possible regulatory function.