A new bacteriophage T4-induced DNA-dependent ATPase-endonuclease was purified to essential homogeneity from an extract of late infected Escherichia coli. Both DNA-dependent ATPase and endonuclease activities co-chromatograph, co-sediment, and have been renatured from a single 43-kilodalton protein eluted following sodium dodecyl sulfate-polyacrylamide gel electrophoresis, suggesting that both activities are exerted by one multifunctional protein. Duplex, single-stranded, and supercoiled DNAs are all effective activators of the high specific activity ATPase which produces ADP and inorganic PO4. The enzyme displays a broad specificity towards the nucleoside and deoxynucleoside triphosphates, and the ATPase activity is strongly inhibited by DNA-intercalating compounds. The endonuclease appears to be most active on supercoiled DNA, producing double-stranded breaks in duplex DNA, and does not require nucleoside triphosphates. An antiserum against the purified enzyme immunoprecipitated it, inhibited its ATPase activity, and also precipitated from extracts a T4-induced protein of Mr = 43,000. This antigen was not found in uninfected E. coli, or following a gene 55am mutant (late protein synthesis defective) infection, and was not detected following infection with T4 amber mutants of any early capsid protein gene which blocks T4 head protein cleavage in vivo. In a pulse-chase experiment, the radioactive antigen was not found following a pulse of radioactive amino acids, but appeared after a chase with excess nonradioactive amino acids. The enzyme-related antigen is apparently produced by cleavage of a precursor by the T4 head assembly proteinase which processes a number of prohead proteins. These processing reactions are dependent in vivo upon assembly of the prohead and are required for its maturation. The evidence suggests that this enzyme functions in head assembly and DNA packaging, and originates as the cleavage product of a prohead precursor protein.