The androgen receptor (AR) is a member of the steroid receptor subfamily of nuclear receptors and is important for normal male sexual differentiation and fertility. The major transactivation function of the AR, termed activation function 1 (AF1), is modular in structure and has been mapped to the N terminus of the protein. To understand better the mechanisms whereby the AR activates transcription, we have established a novel cell-free transcription assay. This is based on the use of a dual reporter gene template, containing promoter proximal and distal G-less cassettes, which result in different size transcripts that can be easily detected and quantified. The promoter proximal transcript gives an indication of transcription initiation and promoter escape, whereas the relative levels of the distal transcript indicate elongation efficiency. The AR-AF1-Lex protein enhanced production of both transcripts whereas, in the absence of DNA binding, the AF1 domain squelched both initiation and elongation. Mutations in the transactivation domain that impaired transactivation and/or binding of the general transcription factor IIF (TFIIF) were found to reduce the ability of AR-AF1 to squelch transcription. Addition of recombinant TFIIF reversed squelching of the promoter-proximal but not the -distal G-less transcript, whereas addition of TATA-binding protein failed to reverse squelching of either transcript. Taken together, these results demonstrate that the AR N-terminal transactivation function, AF1, has the potential to regulate transcription at both the level of initiation and elongation, and that interactions with TFIIF are important during preinitiation complex assembly/open complex formation and/or promoter escape.