Many bacteriophages modulate the host transcription machinery for efficient expression of their own genomes. Phage P4 polarity suppression protein, Psu, is a building block of the viral capsid and inhibits the hexameric transcription termination factor, rho by presently unknown mechanisms. We elucidated cryogenic electron microscopy structures of rho-Psu complexes, showing that Psu dimers laterally clamp two inactive, open rho rings and promote their expansion to higher-oligomeric states. Systematic ATPase, nucleotide binding and nucleic acid binding studies revealed that Psu hinders rho ring closure and traps nucleotides in their binding pockets on rho. Structure-guided mutagenesis in combination with growth, pull-down and termination assays further delineated the functional rho-Psu interfaces. Bioinformatic analyses suggested that, in addition to guarding its own genome against rho, Psu enables expression of diverse phage-defense systems commonly found in P4-like mobile genetic elements across bacteria. Thus, Psu is a widespread gene regulator that inhibits rho via forced hyper-oligomerization.