The retrovirus equine infectious anemia virus (EIAV) encodes a dUTPase situated between reverse transcriptase and integrase. We have described the Inability of EIAV with a 270-bp dUTPase deletion, ΔDU EIAV, to replicate to wild-type (WT) levels in equine macrophages (D. S. Threadgill, W K. Steagall, M. T. Flaherty, F. J. Fuller, S. T. Perry, K. E. Rushlow, S. F. J. LeGrice, and S. L. Payne, J. Virol. 67, 2592-2600, 1993). Here we describe the construction of a second dUTPase-deficient virus (DUD71E) containing a single amino acid substitution in dUTPase. ΔDU and DUD71E replicate to 2% of WT levels in macrophages by 7 days postinfection, when WT EIAV is highly cytopathic. To identify the replication block(s), we analyzed DNA synthesis, integration, and transcription. DNA synthesis was normal in macrophages, with evidence of full-length viral DNA by 24 hr postinfection. The level of integrated ΔDU and DUD71E DNA appeared to be decreased 2- to 3-fold compared to WT. Steady-state levels of full-length viral transcripts were decreased over 100-fold, indicating that replication of dUTPase-deficient EIAV is blocked between vital DNA synthesis and transcription. As dUTP hydrolysis normally plays a role in preventing incorporation of uracil into newly synthesized DNA, we investigated the possibility that dUTPase-deficient EIAV DNA contains uracil. In vitro assays showed that while WT virions do not utilize dUTP, dUTPase-deficient virus and recombinant RT synthesize uracil-containing DNA. The presence of uracil in viral DNA recovered from ΔDU- and DUD71E-infected macrophages was also demonstrated. In macrophages, a virally encoded dUTPase may be necessary to prevent the incorporation of uracil into vital DNA.