Phi 29 DNA polymerase is able to catalyze two different synthetic reactions: protein-primed initiation and DNA polymerization. We have studied the fidelity of phi 29 DNA polymerase when carrying out these two reactions. Global fidelity was dissected into three steps: insertion discrimination, mismatch elongation, and proofreading. The insertion discrimination of phi 29 DNA polymerase in DNA polymerization ranged from 10(4) to 10(6). The efficiency of mismatch elongation was 10(5)-10(-6)-fold lower than that of a properly paired primer terminus. These factors indicate that DNA polymerization catalyzed by phi 29 DNA polymerase is a highly accurate process. Conversely, the insertion fidelity of protein-primed initiation was quite low, the insertion discrimination factor being about 10(2). Mismatch elongation discrimination was also rather low: mismatched terminal protein (TP).dNMP complexes were elongated from 2- to 6-fold more slowly than the correct TP.dNMP complex. Even more, the 3'-->5' exonuclease activity of phi 29 DNA polymerase was unable to act on the TP.dNMP initiation complex, precluding the possibility that a wrong dNMP covalently linked to TP could be excised and corrected. Therefore, protein-primed initiation can be predicted as a quite inaccurate reaction. The problem of maintaining the sequence at the DNA ends is discussed in the context of a recently described model for protein-primed initiation.