The sigma (sigma) subunit of prokaryotic RNA polymerase is essential for promoter recognition. sigma Factor directs the RNA polymerase core subunits (alpha2beta beta') to the promoter consensus elements and thereby confers selectivity for transcription initiation. The N-terminal domain (region 1.1) of Escherichia coli sigma70 has been shown to inhibit DNA binding by the C-terminal DNA recognition domains. Since DNA recognition is the first step of transcription initiation, we predicted that the N-terminal domain of sigma70 may also influence the initiation of transcription by holoenzyme (alpha2beta beta'sigma). N-terminally truncated sigma70 derivatives were used to reconstitute holoenzyme, and transcription by the mutant holoenzymes was analyzed in vitro. Deletion of the first 75 to 100 amino acids of sigma70 (region 1.1) resulted in both a slow rate of transition from a closed promoter complex to a DNA- strand-separated open complex, as well as a reduced efficiency of transition from the open complex to a ternary initiated complex. These effects were partially reversed by the addition of a polypeptide containing region 1.1 in trans. Therefore, region 1.1 not only modulates DNA binding but is important for efficient transcription initiation, once a closed complex has formed. A deletion of the first 133 amino acids, which removes regions 1.1 and 1.2, resulted in arrest of initiation at the earliest closed complex, suggesting that region 1.2 is required for open complex formation.