The conserved bacterial transcription terminator, Rho, is a potent target for bactericidal agents. Psu, a bacteriophage P4 capsid protein, is capable of inducing anti-termination to the Rho-dependent transcription termination. Knowledge of structural and mechanistic basis of this anti-termination is required to design peptide-inhibitor(s) of Rho from Psu. Using suppressor genetics, cross-linking, protein foot-printing and FRET analyses, we describe a conserved disordered structure, encompassing 139–153 amino acids of Rho, as the primary docking site for Psu. Also a neighbouring helical structure, comprising 347–354 amino acids, lining its central channel, plays a supportive role in the Rho–Psu complex formation. Based on the crystal structure of Psu, its conformation in the capsid of the P4 phage, and its interacting regions on Rho, we build an energy-minimized structural model of the Rho:Psu complex. In this model, a V-shaped dimer of Psu interacts with the two diagonally opposite subunits of a hexameric Rho, enabling Psu to form a ‘lid’ on the central channel of the latter. We show that this configuration of Psu makes the central channel of Rho inaccessible, and it causes a mechanical impediment to its translocase activity.