Available evidence suggests that one or more late viral gene products are involved in processing poxvirus replicative intermediates into mature progeny hairpin-terminated genomes. Cloned versions of the Shope fibroma virus (SFV) replicated telomere in the inverted repeat configuration were used as substrates to assay lysates from poxvirus-infected cells for protein fractions that participate in the resolution of the circular substrate plasmid into a linear minichromosome with viral hairpin termini. An activity in a crude protein fraction obtained from vaccinia virus-infected cells at late times during the replicative cycle was capable of accurately resolving all poxviral inverted repeat replicative intermediates tested. The resolved linear products are identical to the products of in vivo resolution and possessed symmetrical nicks which mapped at the borders of the inverted repeat sequence. Strand-specific nicks were also identified, which mapped within the telomere resolution target sequence known to be required for telomere resolution in vivo. The resolving activity that we have identified is specific to virus-infected cells at late times during replication and cleaves cloned poxviral telomeric substrates in a fashion expected of a classic Holliday junction-resolving enzyme in addition to possessing a telomere resolution target-specific nicking activity. Although a Holliday junction-resolving activity would also be expected to play a role in the recombination induced by poxvirus infection, the appearance of the activity described here only after the commencement of viral late protein synthesis suggests that it functions strictly at late times. Other non-viral Holliday junction analogs can also be cleaved by this extract, suggesting that this component of the resolution activity may also play a role in other viral processes that require cleavage of a branched DNA structure. Thus, we have identified a poxviral activity that may be a part of a protein complex which resolves concatemeric replicative intermediates of viral DNA as well as participate in general recombination late during infection.