In the presence of Mg(2+) and a specific dinucleotide primer (ApG or GpG), the influenza virion transcriptase synthesizes the eight discrete segments of complementary RNA (cRNA) containing polyadenylic acid (Plotch and Krug, J. Virol. 21:24-34, 1977). Virions were examined for their ability to cap and methylate cRNA containing di- or triphosphorylated 5' termini. By using the primers ppApG, pppApG, or ppGpG, viral cRNA was synthesized in vitro with [alpha-(32)P]-GTP and S-[methyl-(3)H]adenosylmethionine as labeled precursors. DEAE-Sephadex chromatography of the RNase T2 digest of the cRNA product demonstrated no (3)H incorporation at all and the absence of a (32)P-labeled cap structure. The 5' terminus of ppApG-primed cRNA could be capped and methylated by enzymes from vaccinia virus, indicating that the two 5'-terminal phosphates derived from the primer were preserved in the product cRNA. The cap structure formed by the vaccinia enzymes and released by RNase T2 digestion as m(7)GpppA(m)pGp was radioactively labeled at its 3'-terminal phosphate only when [alpha-(32)P]CTP was used as the labeled precursor during transcription. This indicates that the 5'-terminal sequence of the cRNA is ppApGpC and that, therefore, ppApG most probably initiates transcription exactly at the 3' GpCpU(OH) terminus of the virion RNA templates. Virions were also tested for their ability to cap and methylate ppApG in the absence of transcription. No such activities were detected, whereas under the same conditions the vaccinia virus enzymes successfully capped and methylated this compound. Consequently, these experiments, together with those reported earlier, have not detected in influenza virions any capping and methylating enzymes active on the 5'-initiated termini of viral cRNA chains synthesized in vitro, whether these termini possess one, two, or three phosphates. Some mechanism for capping and methylation of viral cRNA must, however, exist, because the viral mRNA (cRNA) synthesized in the infected cell contains 5'-terminal methylated cap structures (Krug et al., J. Virol. 20:45-53, 1976). Possible mechanisms are discussed.