Upon cell entry, the genomes of herpes simplex virus type 1 (HSV-1) and adenovirus (Ad) associate with distinct nuclear structures termed ND10 or promyelocytic leukemia (PML) nuclear bodies (NBs). PML NB morphology is altered or disrupted by specific viral proteins as replication proceeds. We examined whether adeno-associated virus (AAV) replication compartments also associate with PML NBs, and whether modification or disruption of these by HSV-1 or Ad, both of which are helper viruses for AAV, is necessary at all. Furthermore, to add a fourth dimension to our present view of AAV replication, we established an assay that allows visualization of AAV replication in live cells. A recombinant AAV containing 40 lac repressor binding sites between the AAV inverted terminal repeats was constructed. AAV Rep protein and helper virus-mediated replication of this recombinant AAV genome was visualized by binding of enhanced yellow fluorescent protein-lac repressor fusion protein to double-stranded AAV replication intermediates. We demonstrate in live cells that AAV DNA replication occurs in compartments which colocalize with AAV Rep. Early after infection, the replication compartments were small and varied in numbers from 2 to more than 40 per cell nucleus. Within 4 to 8 h, individual small replication compartments expanded and fused to larger structures which filled out much of the cell nucleus. We also show that AAV replication compartments can associate with modified PML NBs in Ad-infected cells. In wild-type HSV-1-infected cells, AAV replication compartments and PML NBs did not coexist, presumably because PML was completely disrupted by the HSV-1 ICP0 protein. However, alteration or disruption of PML appears not to be a prerequisite for AAV replication, as the formation of replication compartments was normal when the ICP0 mutants HSV-1 dl1403 and HSV-1 FXE, which do not affect PML NBs, were used as the helper viruses; under these conditions, AAV replication compartments did not associate with PML NBs.