Analyses of the complete sequence of the 1.1 X 10(6)-dalton, small (S) RNA of the arenavirus Pichinde and virus-induced cellular RNA species have revealed that the viral nucleoprotein, N, is coded in a subgenomic, non-polyadenylated, virus-complementary mRNA corresponding to the 3' half of the viral RNA (Auperin et al., Virology 134:208-219, 1984). By contrast, a second S-coded product, presumably the viral glycoprotein precursor (GPC), is coded in a subgenomic, virus-sense mRNA corresponding to the 5' half of the RNA. Between the two genes is a unique RNA sequence that can be arranged in a hairpin configuration and may function as a transcription terminator for both genes. The term ambisense RNA is coined to describe this novel coding strategy of a viral RNA. The unique feature of the strategy is that the presumptive GPC mRNA and its translation product cannot be made until viral RNA replication has commenced. In addition, it allows the two subgenomic mRNA species to be regulated independently from each other or from other viral mRNA species. The implications of this strategy on possible mechanisms for the induction and maintenance of viral persistence, an important attribute of arenavirus infections, are discussed.