DNA-directed DNA polymerase and strand displacement activity of the reverse transcriptase encoded by the R2 retrotransposon.

R2 elements are non-long terminal repeat (non-LTR) retrotransposons with a single open reading-frame encoding reverse transcriptase, DNA endonuclease and nucleic acid-binding domains. The elements are specialized for insertion into the 28 S rRNA genes of many animal phyla. The R2-encoded activities initiate retrotransposition by sequence-specific cleavage of the 28 S gene target site and the utilization of the released DNA 3' end to prime reverse transcription (target primed reverse transcription). The activity of the R2 polymerase on RNA templates has been shown to differ from retroviral reverse transcriptases (RTs) in a number of properties. We demonstrate that the R2-RT is capable of efficiently utilizing single-stranded DNA (ssDNA) as a template. The processivity of the enzyme on ssDNA templates is higher than its processivity on RNA templates. This finding suggests that R2-RT is also capable of synthesizing the second DNA strand during retrotransposition. However, R2-RT lacks the RNAse H activity that is typically used by retroviral and LTR-retrotransposon RTs to remove the RNA strand before the first DNA strand is used as template. Remarkably, R2-RT can displace RNA strands that are annealed to ssDNA templates with essentially no loss of processivity. Such strand displacement activity is highly unusual for a DNA polymerase. Thus the single R2 protein contains all the activities needed to make a double-stranded DNA product from an RNA transcript. Finally, during these studies we found an unexpected property of the highly sequence-specific R2 endonuclease domain. The endonuclease can non-specifically cleave ssDNA at a junction with double-stranded DNA. This activity suggests that second-strand cleavage of the target site may not be sequence specific, but rather is specified by a single-stranded region generated when the first DNA strand is used to prime reverse transcription.