The RNase H activity of reverse transcriptase (RT) is presumably required to cleave the RNA genome following minus strand synthesis to free the DNA for use as a template during plus strand synthesis. However, since RNA degradation by RNase H appears to generate RNA fragments too large to spontaneously dissociate from the minus strand, we have investigated the possibility that RNA displacement by RT during plus strand synthesis contributes to the removal of RNA fragments. By using an RNase H- mutant of Moloney murine leukemia virus (M-MuLV) RT, we demonstrate that the polymerase can displace long regions of RNA in hybrid duplex with DNA but that this activity is approximately 5-fold slower than DNA displacement and 20-fold slower than non-displacement synthesis. Furthermore, we find that although certain hybrid sequences seem nearly refractory to the initiation of RNA displacement, the same sequences may not significantly impede synthesis when preceded by a single-stranded gap. We find that the rate of RNA displacement synthesis by wild-type M-MuLV RT is significantly greater than that of the RNase H- RT but remains less than the rate of non-displacement synthesis. M-MuLV nucleocapsid protein increases the rates of RNA and DNA displacement synthesis approximately 2-fold, and this activity appears to require the zinc finger domain.