A template-dependent, in vitro rotavirus RNA replication system was established. The system initiated and synthesized full-length double-stranded RNAs on rotavirus positive-sense template RNAs. Native rotavirus mRNAs or in vitro transcripts, with bona fide 3' and 5' termini, derived from rotavirus cDNAs functioned as templates. Replicase activity was associated with a subviral particle containing VP1, VP2, and VP3 and was derived from native virions or baculovirus coexpression of rotavirus genes. A cis-acting signal involved in replication was localized within the 26 3'-terminal nucleotides of a reporter template RNA. Various biochemical and biophysical parameters affecting the efficiency of replication were examined to optimize the replication system. A replication system capable of in vitro initiation has not been previously described for Reoviridae.