Initiation events in the packaging of bacteriophage phi 29 DNA-gp3 (DNA-gene product 3 complex) were studied in a completely defined in-vitro system that included purified proheads, DNA-gp3 and the DNA packaging protein gp16. In the sequential interactions, gp16 first bound to, and was modified by, the prohead. The prohead-gp16 complex then bound to DNA-gp3, resulting in a second modification of gp16 that permitted binding of ATP. DNA-gp3 aggregates were produced, and the hydrolysis of ATP accompanied DNA-gp3 packaging. Binding and hydrolysis of ATP by gp16 was both prohead- and DNA-gp3-dependent. Interruption of packaging by DNase I addition revealed filled heads but few particles containing partial lengths of DNA, suggesting that following a rate-limiting initiation, the translocation of DNA-gp3 into the prohead was much faster in the defined in-vitro system than in extracts.