Poxviruses, unlike other DNA viruses, replicate in the cytoplasm of the cell and encode most or all of the enzymes and factors needed for transcription of their genomes. Vaccinia virus provides a unique system for combining biochemical and genetic approaches for investigating mechanisms of gene regulation, and has led to many basic discoveries. Studies with vaccinia virus indicated that the genes are divided into three temporal classes~early, intermediate, and late~that are regulated in a cascade fashion. By infecting cells in a highly synchronous manner, the waves of early, intermediate, and late mRNA were clearly demarcated for the first time. Emphasis during the past year was placed on the factors required for intermediate and late transcription. The role for the capping enzyme in initiation of intermediate transcription was shown to be independent of its RNA guanylytransferase function. In vivo studies supported the role of the product of the G8R gene in late transcription and further showed that it is not required for intermediate transcription. The 17 kD product of the A1L gene was shown to be a transcription factor and to bind zinc. Another late transactivator protein of 26 kD encoded by the A2L gene also was shown to be a zinc-binding protein. Moreover, mutations of the zinc-binding domain abrogated the transcriptional transactivation property of the factor. The mRNAs of vaccinia virus, like those of eukaryotes, contain a 3/ poly(A) tail. Further studies of the vaccinia virus-encoded poly(A) polymerase demonstrated that the small VP39 subunit enhances activity by converting the slow non-processive reaction to a rapid semi-processive one.