Betaretroviruses encode dUTPase, an essential factor in DNA metabolism and repair, in the pro open reading frame located between gag and pol. Ribosomal frame-shifts during expression of retroviral proteins provide a unique possibility for covalent joining of nucleocapsid (NC) and dUTPase within Gag-Pro polyproteins. By developing an antibody against the prototype betaretrovirus Mason-Pfizer monkey virus dUTPase, we demonstrate that i) the NC-dUTPase fusion protein exists both within the virions and infected cells providing the only form of dUTPase, and ii) the retroviral protease does not cleave NC-dUTPase either in the virion or in vitro. We show that recombinant betaretroviral NC-dUTPase and dUTPase are both inefficient catalysts compared with all other dUTPases. Dynamic light scattering and gel filtration confirm that the homotrimeric organization, common among dUTPases, is retained in the NC-dUTPase fusion protein. The betaretroviral dUTPase has been crystallized and single crystals contain homotrimers. Oligonucleotide and Zn2+ binding is well retained in the fusion protein, which is the first example of acquisition of a functional nucleic acid binding module by the DNA repair factor dUTPase. Binding of the hexanucleotide ACTGCC or the octanucleotide (TG)4 to NC-dUTPase modulates enzymatic function, indicating that the low catalytic activity may be compensated by adequate localization.