During transcription elongation the nascent RNA remains base-paired to the template strand of the DNA before it is displaced and the two strands of the DNA reanneal, resulting in the formation of a transcription "bubble" of approximately 10 bp. To examine how the length of the RNA-DNA hybrid is maintained, we assembled transcription elongation complexes on synthetic nucleic acid scaffolds that mimic the situation in which transcript displacement is compromised and the polymerase synthesizes an extended hybrid. We found that in such complexes bacterial RNA polymerase exhibit an intrinsic endonucleolytic cleavage activity that restores the hybrid to its normal length. Mutations in the region of the RNA polymerase near the site of RNA-DNA separation result in altered RNA displacement and translocation functions and as a consequence in different patterns of proofreading activities. Our data corroborate structural findings concerning the elements involved in the maintenance of the length of the RNA-DNA hybrid and suggest interplay between polymerase translocation, DNA strand separation, and intrinsic endonucleolytic activity.