Retroviral nucleocapsid (NC) proteins are short, basic proteins containing one or two highly conserved zinc-finger domains, each having a common sequence motif CX2CX4HX4C (referred to as CCHC) (1-4). The basic residues and zinc fingers are both required for virus replication (reviewed in (5-7)). NC is an abundant component of the HIV-1 retrovirus and is associated with the two copies of genomic RNA in the interior of the mature virus particle (7). It is first synthesized as part of the Gag polyprotein precursor and then processed to its mature 55-amino acid form via site-specific proteolysis during virus maturation (7-10). NC is a multifunctional nucleic acid binding protein, which plays a role in essentially every step of the retroviral replication cycle, from packaging and assembly to reverse transcription and DNA integration. NC (or the NC domain of the Gag precursor protein) is involved in dimerization of the RNA genome and stabilization of the dimer (11-15), genomic RNA packaging (16), tRNA primer placement (17-24), the initiation step (25-27), and minus-(reviewed in Refs. (5, 6, 28); for more recent references, see following text) and plus-strand (29-32) transfer events during reverse transcription. NC was also shown to alleviate pausing during reverse transcription (33-37) and to stimulate integration in vitro into a model target DNA (38-41). While some NC functions such as genomic RNA packaging are believed to involve sequence-specific binding to nucleic acids (16); see also (42-45), NC also displays more general nucleic acid binding properties. In addition, NC is a nucleic acid "chaperone" protein, catalyzing the rearrangement of nucleic acids into thermodynamically more stable structures (6, 28, 46-48). The chaperone activity of NC is critical to reverse transcription, a fact that has become evident as a result of the concerted effort of many researchers over the past decade (5, 6, 28, 49). However, the physical mechanism of NC's chaperone function remained unclear until recently. During the past few years, detailed quantitative information has accumulated on the effect of NC on nucleic acid annealing and strand transfer both in vitro and during virus replication. As a result, an understanding of NC's chaperone activity at the molecular level is beginning to emerge. In particular, it now seems clear that the chaperone function of NC is determined by two independent activities: its abilities to destabilize nucleic acid secondary structure and to aggregate nucleic acids. Both activities are related to NC's nonspecific nucleic acid-binding capability. In addition, neither of these two NC activities relies on ATP hydrolysis. These properties of NC determine its main features as an ATP-independent stoichiometrically binding nucleic acid chaperone (47, 50, 51). This chapter focuses on recent biochemical and biophysical studies examining the nucleic acid chaperone function of HIV-1 NC (also referred to as NCp7) in reverse transcription. Some of these studies were carried out with different forms of NC, including an extended 71- or 72-amino acid protein (NC71, which consists of NCp7 plus the spacer peptide SP2 or NC72, which is like NC71, but has one additional amino acid at its C-terminus, respectively; both forms are also termed NCp9) and truncated 42- and 44-amino acid versions [(12-53)NC and (12-55)NC]. We first describe what is known about HIV-1 NC's structure and nucleic acid binding properties. Next, we describe the steps in reverse transcription and discuss NC's effect on these events. In addition, the contribution of the zinc fingers to NC's nucleic acid chaperone activity will be extensively discussed. We will then summarize the current evidence for both components of NC's chaperone activity (i.e., nucleic acid destabilization and aggregation), and show how they may work together to yield an efficient mechanism for annealing complementary structured nucleic acids. This chapter will not cover NC's role in other steps of the retrovirus replication cycle, including RNA packaging (16), virus assembly (7, 52), integration (38-41), and recombination (53).