The genome of the geminivirus tomato golden mosaic virus (TGMV) consists of two single-stranded circular DNAs, A and B, that replicate through a rolling-circle mechanism in nuclei of infected plant cells. The TGMV origin of replication is located in a conserved 5' intergenic region and includes at least two functional elements: the origin recognition site of the essential viral replication protein, AL1, and a sequence motif with the potential to form a hairpin or cruciform structure. To address the role of the hairpin motif during TGMV replication, we constructed a series of B-component mutants that resolved sequence changes from structural alterations of the motif. Only those mutant B DNAs that retained the capacity to form the hairpin structure replicated to wild-type levels in tobacco protoplasts when the viral replication proteins were provided in trans from a plant expression cassette. In contrast, the same B DNAs replicated to significantly lower levels in transient assays that included replicating, wild-type TGMV A DNA. These data established that the hairpin structure is essential for TGMV replication, whereas its sequence affects the efficiency of replication. We also showed that TGMV AL1 functions as a site-specific endonuclease in vitro and mapped the cleavage site to the loop of the hairpin. In vitro cleavage analysis of two TGMV B mutants with different replication phenotypes indicated that there is a correlation between the two assays for origin activity. These results suggest that the in vivo replication results may reflect structural and sequence requirements for DNA cleavage during initiation of rolling-circle replication.