Nucleosome arrays inhibit both initiation and elongation of transcripts by bacteriophage T7 RNA polymerase. We have examined the effects of nucleosome cores on the initiation and elongation of RNA transcripts by phage T7 RNA polymerase in vitro. A transcription template, pT207-18, was constructed containing tandemly repeated 207 base-pair (bp) nucleosome positioning sequences from a sea urchin (Lytechinus variegatus) 5 S RNA gene inserted between the T7 and SP6 transcription promoters of pGEM-3Z. Nucleosome cores were reconstituted onto supercoiled, closed circular pT207-18 DNA and double label transcription experiments were performed to determine the effects of nucleosome cores on the initiation and elongation of transcripts by T7 RNA polymerase. Both transcript initiation and elongation were inhibited, the extent of the inhibition being directly proportional to the number of nucleosome cores reconstituted onto the pT207-18 DNA templates. Time course transcription experiments indicated that nucleosome cores caused a reduction in the equilibrium length of transcripts and not mere retardation of elongation rates. Continuous regularly spaced linear arrays of nucleosomes were obtained by digesting reconstituted nucleosomel pT207-18 templates with DraI, for which a unique restriction site lies within the nucleosome positioning region of the 207 bp 5 S rDNA repeat sequence. After in vitro transcription with T7 RNA polymerase an RNA ladder with 207 nucleotide spacing was obtained, indicating that transcription can occur through continuous arrays of positioned nucleosome cores. It is demonstrated that nucleosome cores partially inhibit the elongation of transcripts by T7 RNA polymerase, while allowing passage of the transcribing polymerase through each nucleosome core at an upper limit efficiency of 85%. Hence, complete transcripts are produced with high efficiency from short nucleosomal templates, while the production of full-length transcripts from long nucleosomal arrays is relatively inefficient. The results indicate that nucleosome cores have significant inhibitory effects in vitro not only on transcription initiation but on transcription elongation as well, and that special mechanisms may exist to overcome these inhibitory effects in vivo.