We compared the template properties of a subgenomic RNA that contained the authentic 5' and 3' ends of the vesicular stomatitis virus genome with those of RNAs in which the wild-type termini were engineered to extend their complementarity from 8 to 51 nucleotides as seen in defective interfering RNAs. The RNA with authentic 5' and 3' ends directed abundant transcription but low replication. In contrast, RNAs with complementary termini derived from either end of the genome replicated well but transcribed poorly or not at all. These results have implications for understanding the mechanisms of RNA replication and transcription; they explain the replicative dominance of defective interfering RNAs and demonstrate that the extent of terminal complementarity rather than its exact sequence is a major determinant of whether the template predominantly directs transcription or replication.