Hepatitis B viruses replicate through reverse transcription of an RNA intermediate. In contrast to retroviral reverse transcriptases, their replication enzyme, P protein, does not use a nucleic acid primer but initiates DNA synthesis de novo from within an RNA stem-loop structure called epsilon. A short DNA oligonucleotide is copied from epsilon and covalently attached to P protein, and then synthesis is arrested. The information for initiation site selection and synthesis arrest must be contained in the structure of the P protein/epsilon complex. Because P protein activity depends on cellular chaperones this complex can as yet only be generated by in vitro translation of duck hepatitis B virus P protein in rabbit reticulocyte lysate; functional interaction with its cognate RNA element Depsilon can be monitored by the covalent labeling of P protein during primer synthesis. Combining this in vitro priming reaction and a set of chimeric RNA-DNA Depsilon analogues, we found that only five ribose residues in the 57-nucleotide stem-loop were sufficient to provide a functional template; these are a single residue in the template region and the two base pairs at the tip of the lower stem. The base identities in the very same region are essential as well. The presence of this 2'-OH- and base-dependent determinant shortly downstream of the initiation site suggests a mechanism that can account for both initiation site selection and programmed primer synthesis arrest.