Recent studies have provided direct evidence that the baculovirus very late factor 1 (VLF-I) of Autographa californica multicapsid nucleopolyhedrovirus (AcMNPV) was essential for BV production. To elucidate how vlf-1 deletion blocks BV production we generated a vlf-1 knockout bacmid by ET-recombination technology on AcMNPV bacmid propagated in Escherichia coli. Bacmid DNA transfection and supernatant passage assay revealed that the vlf-1 knockout bacmid was unable to replicate in cell culture, while vlf-1 repair bacmid, which was generated by transposition of the vlf-1 ORF under control of its native promoter into polyhedrin gene locus of vlf-1 knockout bacmid, resumed viral replication ability at wildtype levels. Results of these assays proved the correct construction of the vlf-1 knockout bacmid. Subsequent electron microscopy revealed that the vlf-1 knockout bacmid failed to form nueleocapsid in the nuclei of the transfected cells. Instead, intensely electron-dense virogenic stroma characteristic of viral DNA synthesis were observed. Thus, it is demonstrated for the first time that vlf-1 knockout blocked nucleocapsid formation and the defective nucleocapsid formation resulted in the abolishment of BV and ODV production. Possible roles of vlf-1 in genome processing are suggested and discussed.