Bacteriophage T7 DNA polymerase efficiently incorporates a chain-terminating dideoxynucleotide into DNA, in contrast to the DNA polymerases from Escherichia coli and Thermus aquaticus. The molecular basis for this difference has been determined by constructing active site hybrids of these polymerases. A single hydroxyl group on the polypeptide chain is critical for selectivity. Replacing tyrosine-526 of T7 DNA polymerase with phenylalanine increases discrimination against the four dideoxynucleotides by > 2000-fold, while replacing the phenylalanine at the homologous position in E. coli DNA polymerase I (position 762) or T. aquaticus DNA polymerase (position 667) with tyrosine decreases discrimination against the four dideoxynucleotides 250- to 8000-fold. These mutations allow the engineering of new DNA polymerases with enhanced properties for use in DNA sequence analysis.