Gene 4 protein of bacteriophage T7 is a multifunctional enzyme that both stimulates T7 DNA polymerase during leading strand synthesis, and synthesizes RNA primers that initiate lagging strand synthesis. Both activities are dependent on the ability of the gene 4 protein to translocate unidirectionally (5' to 3') along single-stranded DNA (Tabor, S., and Richardson, C.C. (1981) Proc. Natl. Acad. Sci. U. S. A. 78, 205-209), a reaction that is coupled to the hydrolysis of nucleoside 5'-triphosphates. In this paper, we show that gene 4 protein, in the absence of other proteins, is a helicase, an activity previously inferred from its ability to stimulate T7 DNA polymerase on duplex DNA. We have designed a DNA substrate for use in characterizing the helicase activity which consists of a short DNA fragment bearing a single-stranded 3'-tail when annealed to circular, single-stranded M13 DNA. With such a DNA substrate, the gene 4 protein can disrupt the helical structure of a 96-nucleotide-long fragment, resulting in its displacement from the circle. Helicase activity requires a long stretch of at least 17 nucleotides of single-stranded DNA on the 5'-side of the duplex to be unwound. In addition, helicase activity is not observed unless a short (greater than 6 nucleotides) single-stranded 3'-tail is present. The helicase activity has an absolute requirement for hydrolysis of a nucleoside 5'-triphosphate. The inhibitor of nucleoside triphosphate hydrolysis, beta, gamma-methylene dTTP, is an effective inhibitor of helicase activity. Based on these results, we propose a model for the action of the gene 4 protein at a replication fork.