A protein identified as the 158-amino acid product of the greA gene was isolated from Escherichia coli. When added to a halted ternary transcription complex, the GreA protein induced cleavage and removal of the 3' proximal dinucleotide from the nascent RNA. The new 3' terminus generated by the cleavage could be extended into longer transcripts. GreA-mediated cleavage of a transcript appears to permit a ternary complex to resume transcription from a state of indefinite elongation arrest induced by a specific DNA site. The GreA protein tended to interact with RNA polymerase during purification and recycled between RNA polymerase molecules in the course of the in vitro cleavage reaction. Similar biochemical activities have been reported in eukaryotic RNA polymerases, indicating that transcript cleavage and restart of elongation may be a general transcriptional mechanism.