The adeno-associated virus (AAV) Rep78 protein is required for many aspects of AAV's life cycle including its DNA replication and the regulation of its gene expression. Because of increasing utilization of AAV as a gene therapy vector and its possible use as an anti-cancer/anti-viral agent, the complete characterization of its Rep78 regulatory protein is important. In order to study various functional aspects of Rep78, we have cloned and expressed the Rep78 gene in Escherichia coli using an inducible expression plasmid. The entire Rep78 open reading frame (nt 321 to 2185) was cloned into the LacZ inducible expression vector pMALc2. Upon induction of the Ptac promoter with isopropyl thio-beta-D-galactopyranoside (IPTG), Rep78 is produced as a fusion protein with maltose binding protein (MBP). This recombinant MBP-Rep78 protein displayed all the biochemical activities which are described for the wild type protein including binding to the AAV terminal repeats (TR), endonuclease activity, and helicase activity. Furthermore, for the first time, ATP binding by Rep78 is demonstrated.