HIV-1 reverse transcription involves several nucleic acid rearrangements, which are catalyzed by the nucleocapsid protein (NC). Annealing of the trans-activation response element (TAR) DNA hairpin to a complementary TAR RNA hairpin, resulting in the formation of an extended 98-base-pair duplex, is an essential step in the minus-strand transfer step of reverse transcription. To elucidate the TAR RNA/DNA annealing reaction pathway, annealing kinetics were studied systematically by gel-shift assays performed in the presence or absence of HIV-1 NC. Truncated 27 nucleotide mini-TAR RNA and DNA constructs were used in this work. In the absence of NC, the annealing is slow, and involves the fast formation of an unstable extended "kissing" loop intermediate, followed by a slower strand exchange between the terminal stems. This annealing is very sensitive to loop-loop complementarity, as well as to nucleic acid concentration, ionic strength and temperature. NC stimulates the annealing approximately 5000-fold by stabilizing the bimolecular intermediate approximately 100 to 200-fold, and promoting the subsequent strand exchange reaction approximately 10 to 20-fold. NC concentration dependence studies suggest that there is a direct correlation between the amount of NC required to stabilize the intermediate and the amount needed to induce mini-TAR aggregation. Whereas saturating levels of NC are required to efficiently aggregate nucleic acids, sub-saturating NC is sufficient to significantly enhance duplex destabilization. Equilibrium levels of mini-TAR RNA/DNA annealing were also measured under a variety of conditions. Taken together, the results presented here provide a quantitative accounting of HIV-1 NC's aggregation and duplex destabilizing activity, and provide insights into the universal nucleic acid chaperone activity of this essential viral protein.