The DNA-dependent RNA polymerase of bacteriophage T7 utilizes a specific RNA as a template and replicates it efficiently and accurately. The RNA product (X RNA), approximately 70 nucleotides long, is initiated with either pppC or pppG and contains an AU-tich sequence. Replication of X RNA involves synthesis of complementary strands. Both strands are also significantly self-complementary, producing RNA with an extensive hairpin secondary structure. Replication of X RNA by T7 RNA polymerase is both template and enzyme specific. No other RNA serves as template for replication; neither do other polymerases, including the closely related T3 RNA polymerase, replicate X RNA. The T7 RNA polymerase-X RNA system provides an interesting model for studying replication of RNA by DNA-dependent RNA polymerases. Such a mechanism has been proposed to propagate viroids and hepatitis delta, pathogenic RNAs whose replication seems to depend on cellular RNA polymerases.