Vaccinia virus infection induces expression of a protein which can catalyze joint molecule formation between a single-stranded circular DNA and a homologous linear duplex. The kinetics of appearance of the enzyme parallels that of vaccinia virus DNA polymerase and suggests it is an early viral gene product. Extracts were prepared from vaccinia virus-infected HeLa cells, and the strand exchange assay was used to follow purification of this activity through five chromatographic steps. The most highly purified fraction contained three major polypeptides of 110 +/- 10, 52 +/- 5, and 32 +/- 3 kDa. The purified protein requires Mg2+ for activity, and this requirement cannot be satisfied by Mn2+ or Ca2+. One end of the linear duplex substrate must share homology with the single-stranded circle, although this homology requirement is not very high, as 10% base substitutions had no effect on the overall efficiency of pairing. As with many other eukaryotic strand exchange proteins, there was no requirement for ATP, and ATP analogs were not inhibitors. Electron microscopy was used to show that the joint molecules formed in these reactions were composed of a partially duplex circle of DNA bearing a displaced single-strand and a duplex linear tail. The recovery of these structures shows that the enzyme catalyzes true strand exchange. There is also a unique polarity to the strand exchange reaction. The enzyme pairs the 3' end of the duplex minus strand with the plus-stranded homolog, thus extending hybrid DNA in a 3'-to-5' direction with respect to the minus strand. Which viral gene (if any) encodes the enzyme is not yet known, but analysis of temperature-sensitive mutants shows that activity does not require the D5R gene product. Curiously, v-SEP appears to copurify with vaccinia virus DNA polymerase, although the activities can be partially resolved on phosphocellulose columns.