We have discovered that T7 RNA polymerase, purified to apparent homogeneity from overexpressing Escherichia coli cells, possesses a DNase and an RNase activity. Mutations in the active center of T7 RNA polymerase abolished or greatly decreased the nuclease activity. This nuclease activity is specific for single-stranded DNA and RNA oligonucleotides and does not manifest on double-stranded DNAs. Under the conditions of promoter-driven transcription on double-stranded DNA, no nuclease activity was observed. The nuclease attacks DNA oligonucleotides in mono-or dinucleotide steps. The nuclease is a 3 to 5 exonuclease leaving a 3 -OH end, and it degrades DNA oligonucleotides to a minimum size of 3 to 5 nucleotides. It is completely dependent on Mg 2؉ . The T7 RNA polymerase-nuclease is inhibited by T7 lysozyme and heparin, although not completely. In the presence of rNTPs, the nuclease activity is suppressed but an unusual 3 -end-initiated polymerase activity is unmasked. RNA from isolated preelongation and elongation complexes arrested by a psoralen roadblock or naturally paused at the 3 -end of an oligonucleotide template exhibited evidence of nuclease activity. The nuclease activity of T7 RNA polymerase is unrelated to pyrophosphorolysis. We propose that the nuclease of T7 RNA polymerase acts only in arrested or paused elongation complexes, and that in combination with the unusual 3 -end polymerizing activity, causes heterogeneity in elongation complexes. Additionally, during normal transcription elongation, the kinetic balance between nuclease and polymerase is shifted in favor of polymerase.Transcription by procaryotic DNA-dependent RNA polymerases can be represented as follows (Scheme I).Elongation Termination SCHEME I. Representation of a transcription cycle. Open complexes synthesize short RNAs (up to 10 nts) during abortive initiation. After clearing the promoter, RNAP enters the elongation phase. Termination occurs at certain DNA sequences in either a factor-dependent or a factor-independent manner (2). The current view of transcription elongation has been possible because of our ability to arrest elongation at specific sites on DNA templates, partial purification of arrested complexes, and the enzymatic and chemical probing of their structures (3-17).The unexpected discovery of an RNA cleavage reaction in arrested Escherichia coli complexes (18) was followed by documentation of analogous cleavage reactions in other RNAPs (19 -23). E. coli RNAP and eucaryotic RNAP II are capable of RNA cleavage in binary and ternary complexes (24 -26). GreA and GreB of E. coli enhance the intrinsic cleavage by E. coli RNAP (25,27,28). GreA and GreB (and a eucaryotic counterpart, SII) prevent elongation arrest (29). GreA may participate in the fidelity of RNA synthesis (30).T7 RNAP (98.8 kDa) belongs to a class of single-subunit RNAPs that includes T3 and SP6 phage RNAPs (31-33). The three-dimensional structure of T7 RNAP shows high ␣-helicity with a deep cleft. Using a novel photochemical cross-linking technique, we have id...