On the ribosomal genes of Xenopus laevis, the T3 terminator is located approximately 60 bp upstream of the 5' boundary of the gene promoter. We have shown previously that mutation of the terminator simultaneously abolishes termination and impairs initiation by RNA polymerase I. Here, we show that the terminator influences the promoter by two distinct mechanisms. In one mechanism the terminator protects the promoter by preventing polymerase from reading through the initiation complex. In a second mechanism, the terminator interacts directly with the promoter, whether or not termination occurs. This positive interaction requires precise positioning of the terminator relative to the promoter and is sensitive to movement of the terminator by as little as 1 or 2 bp. We conclude that the terminator and promoter interact as one interdependent complex.