At the OS level the things are a bit different from how it looks from Python - from Python a file looks almost like a list of strings, with each string having arbitrary length, so it seems to be easy to swap a line for something else without affecting the rest of the lines:
l = ["Hello", "world"]
l[0] = "Good bye"
In reality, though, any file is just a stream of bytes, with strings following each other without any "padding". So you can only overwrite the data in-place if the resulting string has exactly the same length as the source string - otherwise it'll simply overwrite the following lines.
If that is the case (your processing guarantees not to change the length of strings), you can "rewind" the file to the start of the line and overwrite the line with new data. The below script converts all lines in file to uppercase in-place:
def eof(f):
cur_loc = f.tell()
f.seek(0,2)
eof_loc = f.tell()
f.seek(cur_loc, 0)
if cur_loc >= eof_loc:
return True
return False
with open('testfile.txt', 'r+t') as fp:
while True:
last_pos = fp.tell()
line = fp.readline()
new_line = line.upper()
fp.seek(last_pos)
fp.write(new_line)
print "Read %s, Wrote %s" % (line, new_line)
if eof(fp):
break
Somewhat related: Undo a Python file readline() operation so file pointer is back in original state
This approach is only justified when your output lines are guaranteed to have the same length, and when, say, the file you're working with is really huge so you have to modify it in place.
In all other cases it would be much easier and more performant to just build the output in memory and write it back at once. Another option is to write to a temporary file, then delete the original and rename the temporary file so it replaces the original file.