Bacteriophage T4 RNA ligase catalyzes the ATP-dependent ligation of a 5'-phosphoryl-terminated nucleic acid donor to a 3'-hydroxyl-terminated nucleic acid acceptor. We have identified adenylylated DNA and RNA reaction intermediates in which the AMP moiety is attached by a pyrophosphate bond to the 5'-phosphoryl group of the donor. A large amount of DNA-adenylate accumulates during the reaction and the dependence of joining and adenylylation on chain length are similar. The adenylylated donor is joined by ligase to an acceptor in the absence of ATP, and AMP is released stoichiometrically in this reaction. The acceptor is not only a substrate in the reaction but also a cofactor for adenylylation of the donor; in the absence of a 3'-hydroxyl group the activated intermediate does not form. The activated DNA need not join to the acceptor that initially stimulated activation but can also join to another acceptor. This process of acceptor exchanges has proven useful for promoting the cyclization of small DNA substrates and the synthesis of DNA co-polymers.