The rotavirus nonstructural protein NSP2 self-assembles into stable octameric structures that possess nonspecific affinity for single-stranded (ss)RNA and RNA–RNA helix-destabilizing and NTPase activities. Furthermore, NSP2 is a component of replication intermediates with replicase activity and plays a critical role in the packaging and replication of the segmented dsRNA genome of rotavirus. To better understand the function of the protein in genome replication, we examined the effect that purified recombinant NSP2 had on the synthesis of dsRNA by the open core replication system. The results showed that NSP2 inhibited the synthesis of dsRNA from viral mRNA in vitro, in a concentration-dependent manner. The inhibition was overcome by adding increasing amounts of viral mRNA or nonviral ssRNA to the system, indicating that the inhibition was mediated by the nonspecific RNA-binding activity of NSP2. Further analysis revealed that NSP2 interfered with the ability of the open core proteins, GTP, and viral mRNA to form the initiation complex for (−) strand synthesis. Additional experiments indicated that NSP2 did not perturb recognition of viral mRNA by the viral RNA polymerase VP1, but rather interfered with the function of VP2, a protein that is essential for (−) strand initiation and dsRNA synthesis and that forms the T = 1 lattice of the virion core. In contrast to initiation, NSP2 did not inhibit (−) strand elongation. Collectively, the findings provide evidence that the temporal order of interaction of RNA-binding proteins with viral mRNA is a crucial factor impacting the formation of replication intermediates.