During the early stages of transcription, T7 RNA polymerase forms an unstable initiation complex that synthesizes and releases transcripts 2-8 nt in length before disengaging from the promoter and isomerizing to a stable elongation complex. In this study, we used RNA small middle dotprotein and RNA small middle dotDNA crosslinking methods to probe the location of newly synthesized RNA in halted elongation complexes. The results indicate that the RNA in an elongation complex remains in an RNA small middle dotDNA hybrid for about 8 nt from the site of nucleotide addition and emerges to the surface of the enzyme about 12 nt from the addition site. Strikingly, as the transcript leaves its hybrid with the template, the crosslinks it forms with the RNA polymerase involve a portion of a hairpin loop (the specificity loop) that makes specific contacts with the binding region of the promoter during initiation. This observation suggests that the specificity loop may have a dual role in transcription, binding first to the promoter and subsequently interacting with the RNA product. It seems likely that association of the nascent RNA with the specificity loop facilitates disengagement from the promoter and is an important part of the process that leads to a stable elongation complex.