The interferon-induced protein kinase DAI, the double-stranded RNA (dsRNA)-activated inhibitor of translation, plays a key role in regulating protein synthesis in higher cells. Once activated, in a process that involves autophosphorylation, it phosphorylates the initiation factor eIF-2, leading to inhibition of polypeptide chain initiation. The activity of DAI is controlled by RNA regulators, including dsRNA activators and highly structured single-stranded RNAs which block activation by dsRNA. To elucidate the mechanism of activation, we studied the interaction of DAI with RNA duplexes of discrete sizes. Molecules shorter than 30 bp fail to bind stably and do not activate the enzyme, but at high concentrations they prevent activation by long dsRNA. Molecules longer than 30 bp bind and activate the enzyme, with an efficiency that increases with increasing chain length, reaching a maximum at about 85 bp. These dsRNAs fail to activate at high concentrations and also prevent activation by long dsRNA. Analysis of complexes between dsRNA and DAI suggests that at maximal packing the enzyme interacts with as little as a single helical turn of dsRNA (11 bp) but under conditions that allow activation the binding site protects about 80 bp of duplex. When the RNA-binding site is fully occupied with an RNA activator, the complex appears to undergo a conformational change.