Gramicidin, a peptide antibiotic produced by Bacillus brevis, inhibits initiation of transcription by RNA polymerase (nucleosidetriphosphate:RNA nucleotidyltransferase, EC 220.127.116.11). We show here that the presence of gramicidin causes an increase in the rate of cleavage of the sigma subunit of Escherichia coli RNA polymerase by trypsin, although it does not alter the cleavage rate of any of the core subunits. Furthermore, whereas isolated sigma is cleaved much faster than is sigma in holoenzyme, gramicidin substantially decreases the trypsin cleavage rate of isolated sigma. Inhibition of RNA polymerase activity by gramicidin in consistent with a sigma-specific effect: the antibiotic is a strong inhibitor of transcription of T7 phage DNA, which requires sigma for activity, but it has little effect on transcription of sigma-independent templates, such as poly(dA-dT).poly)dA-dT) and calf thymus DNA. These results are discussed in light of the hypothesized role for gramicidin in the initiation of sporulation of B. brevis.