An in vitro transcription assay was used to measure the relative occupancy, sequence specificity, and dissociation kinetics of six actinomycin D binding sites on DNA during conditions of active transcription of the DNA from the lac UV5 promoter. Five of the sites contained a GpC sequence, with three of these having a common AGCT sequence that differed by up to an order of magnitude in affinity for the drug, as indicated by their relative occupany and dissociation kinetics. Positive cooperativity was observed by higher occupancy and slower dissociation kinetics for neighboring GpC sites on a different DNA fragment (UV5-lambda PL). Termination of transcription was observed at some drug binding sites, while complete drug-induced termination of transcription was seen 7-10 nucleotides downstream of two drug sites. This delayed termination was minimized when ITP was incorporated into the transcripts and suggests that a time delay is required to enable stable RNA hairpin helices to form. A model is presented of the role of RNA hairpin helices in delayed, drug-induced termination of transcription. The classical picture of DNA-binding drugs as inhibitors of transcription now appears too simplistic as it does not accommodate this phenomenon. It will be important to gain a greater understanding of the mechanism of this phenomenon of drug-induced termination of transcription, as there are many implications for the design of DNA-acting drugs.