Bacteriophage lambda packages the DNA of the related phage 21 poorly [Hohn, B. (1975) J. Mol. Biol. 98, 93--106]. To understand the nature of the packaging defect, the interaction of the cohesive end site (cos) specific for phage 21 (cos phi 21) with phage lambda terminase has been investigated. The ability of lambda terminase to cleave cos phi 21 was studied in vitro; lambda terminase cleaved cos phi 21 only 1% as well as it cleaved the phage lambda cohesive end site (cos lambda). In vitro packaging experiments showed that the lambda and 21 packaging specificities observed in vivo are also found in vitro. The cos cleavage reaction was modified so that competition experiments could be performed; these experiments showed that cos phi 21 was unable to bind lambda terminase, thus identifying the nature of the defect. Previous work [Feiss, M., Fisher, R. A., Siegele, D. A., Nichols, B. P. & Donelson, J. E. (1979) Virology 92, 56--67] has shown that the base pairs giving lambda or 21 packaging specificity are at the left end of the chromosome, outside the 22-base-pair symmetry region that includes the annealed cohesive ends. Therefore, terminase binding to cos requires interactions with base pairs to the Nu1 side of the cohesive end symmetry segment. The evidence supports the proposition that cos consists of adjacent sites for binding of terminase and for nicking by terminase. Because cos phi 21 can be cut by lambda terminase to terminate DNA packaging, it is proposed that the terminase that binds and nicks at the initial cos site is brought into contact with the terminal cos site by the packaging process. Terminase recognizes and nicks the cohesive end sequence of the terminal cos without requiring the binding site.