We demonstrate the efficient synthesis of DNA with complete replacement of the four deoxyribonucleoside triphosphate (dNTP) substrates with nucleotides carrying fluorescent labels. A different, spectrally separable fluorescent dye suitable for single molecule fluorescence detection was conjugated to each of the four dNTPs via linkage to the terminal phosphate. Using these modified nucleotides, DNA synthesis by phi 29 DNA polymerase was observed to be processive for products thousands of bases in length, with labeled nucleotide affinities and DNA polymerization rates approaching unmodified dNTP levels. Results presented here show the compatibility of these nucleotides for single-molecule, real-time DNA sequencing applications.