Factor-dependent transcription termination during synthesis of vaccinia early mRNAs occurs at heterogeneous sites downstream of a UUUUUNU signal in the nascent transcript. The choice of termination site is flexible and is determined by a kinetic balance between nascent chain elongation and the transmission of the RNA signal to the polymerase. To eliminate ongoing elongation as a variable, we have established a system to study transcript release by purified ternary complexes halted at a defined template position 50-nucleotides 3' of the first U residue of the termination signal. Release of the nascent RNA depends on the vaccinia termination factor (VTF) and an ATP cofactor. Transcript release is blocked by BrUMP substitution within the termination signal of the nascent RNA. In these respects, the release reaction faithfully mimics the properties of the termination event. We demonstrate that ternary complexes are refractory to VTF-mediated transcript release when the first U of the UUUUUNU signal is situated 20 nucleotides from the growing point of the nascent chain. Ribonuclease footprinting of the arrested ternary complexes defines a nascent RNA binding site on the polymerase elongation complex that encompasses a 16-21 nucleotide RNA segment extending proximally from the 3' end of the chain. We surmise that access of VTF to the signal sequence is prevented when UUUUUNU is bound within the nascent RNA binding site. Hence, physical not kinetic constraints determine the minimal distance between the signal and potential sites of 3' end formation.