DNA, RNA, and regulatory molecules control gene expression through interactions with RNA polymerase (RNAP). We show that a short alpha helix at the tip of the flaplike domain that covers the RNA exit channel of RNAP contacts a nascent RNA stem-loop structure (hairpin) that inhibits transcription, and that this flap-tip helix is required for activity of the regulatory protein NusA. Protein-RNA cross-linking, molecular modeling, and effects of alterations in RNAP and RNA all suggest that a tripartite interaction of RNAP, NusA, and the hairpin inhibits nucleotide addition in the active site, which is located 65 angstroms away. These findings favor an allosteric model for regulation of transcript elongation.