The 5'-terminal sequence in the DNA of the parvovirus minute virus of mice (MVM) is a palindrome. It can form a hairpin, the stem of which is entirely base-paired except for three consecutive unpaired nucleotides which form a bubble. Since this structure is well conserved among different parvoviruses, we examined its importance for viral replication by generating MVM mutants with alterations in this region. A clone of MVMp DNA which contained the entire 3' end and more than half of the 5' palindrome was made. Although it lacked the sequence information to form a wild-type bubble, this DNA was infectious. On transfection into A9 fibroblasts, it gave rise to a virus (MVMs) which had a bubble in its 5' palindrome. The bubble consisted of four mismatched nucleotides in the same location as the unpaired nucleotides of the wild-type palindrome. Apparently, neighboring plasmid sequences were incorporated into the viral DNA, enabling formation of the mismatch. This observation suggested that a bubble is critical for growth of MVM but that its sequence is not. To find out whether MVM lacking a bubble in the 5' palindrome is viable, we made a second clone in which the plasmid sequences incorporated in MVMs were removed. Transfection of this DNA gave rise to a virus (MVMx) in which the nucleotides unpaired in the wild-type hairpin are now fully base-paired. Although MVMx can be propagated, it is defective in comparison with wild-type MVMp; it exhibited about a 50-fold-lower ratio of plaque-forming units to DNA content. In mixed infections, MVMp consistently outgrew the bubbleless MVMx. The rate of accumulation of DNA replication intermediates was lower for MVMx than for the wild-type virus. Quantitative analysis of the 5' termini of replicative form DNA suggested that the ability of MVMx to convert hairpin 5' termini to extended termini is impaired. In contrast, the virus with the altered bubble, MVMs, behaved like the wild-type MVMp in all the assays. We conclude that MVM lacking a bubble in its 5'-terminal DNA hairpin is less infectious than and has a selective disadvantage compared with wild-type MVM. The nucleotide sequence of the bubble is not critical. We provide evidence that the presence of a bubble is necessary for efficient viral DNA replication.