The basics of Magnesiums function in PCR. MgCl2 acts as a cofactor and is a catalyzer in PCR. That means, higher concentrations of MgCl2 increases higher productivity of Taq polymerase. But the specificity will be less with high productivity and causes ugly band smears in your gel.
Other functions:
Magnesium also binds to phosphate groups of DNTP's. During replication dntp's gets broken down to dnmp's to form phosphodiester bond between 3' OH of adjacent nucleotide and 5' Phosphate of the upcoming nucleotide. in this reaction Mg++ binds to the alpha phosphate group of dntp and helps in the removal of beta and gamma Phosphate from dntp.
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