Baculovirus late RNAs are transcribed by a four-subunit RNA polymerase that is virus encoded. The late viral mRNAs are capped and polyadenylated, and we have previously shown that capping is mediated by the LEF-4 subunit of baculovirus RNA polymerase. Here we report studies undertaken to determine the mechanism of 3'-end formation. A globin cleavage/polyadenylation signal, which was previously shown to direct 3'-end formation of viral RNAs in vivo, was cloned into a baculovirus transcription template. In vitro assays with purified baculovirus RNA polymerase revealed that 3' ends were formed not by a cleavage mechanism but rather by termination after transcription of a T-rich region of the globin sequence. Terminated RNAs were released from ternary complexes and were subsequently polyadenylated. Mutational analyses indicated that the T-rich sequence was essential for termination and polyadenylation, but the poly(A) signal and the GT-rich region of the globin polyadenylation/cleavage signal were not required. Termination was not dependent on ATP hydrolysis, indicating a slippage mechanism.