Transfer of nascent DNA from an RNA template (donor) to the homologous region of a second RNA template (acceptor) was studied. The templates were designed to assess the roles of the sequences proximal (3' relative to the transferring DNA) to the point of transfer. The donor template was primed with a specific 18 nucleotide DNA such that extension by reverse transcriptase to the end of the template produced a 79 nucleotide product. Homologous strand transfer and subsequent extension on the acceptors produced longer products allowing distinction between strand transfer and donor-directed synthesis. The donor and one particular acceptor shared a region of homology which included 8 tandem 5'-CAGU-3' repeats followed at the 3' end by a 17 nucleotide region of random homologous sequence. Derivatives of the acceptor either completely lacked the 17 nucleotide region or were progressively truncated resulting in a shorter region. With the acceptor lacking this region, prominent transfer products differing in length by 4 nucleotides were observed. Presumably this occurs because the transferring DNA can base-pair with several copies of the repeat elements of the acceptor. Addition of 5 or more of the 17 random nucleotides to the 3' end of the acceptor resulted in transfer products of essentially one length, and consistent with the transferring DNA correctly base-pairing with the 3' nucleotides. Results suggest that the transferring DNA interacts with the acceptor over several bases to form the most energetically stable hybrid duplex prior to extension on the acceptor. Hybrids formed from shorter interactions between the 3' end of the DNA and acceptor are either realinged prior to extension or precluded due to the mechanism of transfer.