We have deleted a single base-pair in the -35 region of the bacteriophage lambda PRM promoter. The deletion (PRM delta 34) creates a better match of PRM to consensus, thereby substantially increasing the activity of the promoter in vitro and in vivo. Since the mutation also increases the overlap between OR2 and the -35 region of PRM, binding of repressor to OR2 no longer activates, but in fact represses PRM. Finally, the mutation decreases the distance between the PRM and PR transcription start sites from 82 to 81 base-pairs. As a consequence, the interaction of RNA polymerase with either promoter in vitro strongly inhibits open complex formation at the other. Kinetic analyses and DNase I protection assays lead to the surprising result that mutual inhibition is not due to steric occlusion. Both promoters can be occupied by RNA polymerase at the same time. Determination of KB and kf revealed that inhibition of PRM delta 34 by PR was manifest in a 100-fold decrease in the value of kf, but at the same time KB was increased tenfold. These data raise the possibility that RNA polymerase molecules bound at the two promoters contact and mutually stabilize each other and that this interaction subsequently inhibits a substep in the isomerization of closed to open complexes. In footprinting assays, each promoter is characterized by sites of enhanced cleavage when that promoter is occupied alone. These enhancements are substantially diminished when both promoters are occupied, suggesting that complexes of each promoter with RNA polymerase alter the structure of complexes formed at the other promoter. Assays of the effects of the delta 34 mutation in vivo indicate that interference between PRM and PR does not limit the rate of open complex formation at PRM in the cell. Apparently, transcription initiation clears the promoter rapidly enough that neither promoter is occupied a significant fraction of the time.