Bacteriophage T7 promoters contain a consensus sequence from -17 to +6 relative to the transcription start site, +1. In addition, the strong class III promoters are characterized by an extended AT-rich region upstream of -17, which is often interrupted by one or more GC base pairs in the weaker class II promoters. Herein we studied the role of the AT-rich region upstream of -17 in transcription regulation of T7 RNA polymerase. Equilibrium DNA binding studies with promoter fragments of consensus sequence truncated at various positions between -17 and -27 showed that the polymerase-promoter complex is significantly stabilized as the upstream AT-rich sequence is extended to and beyond -22. Similarly, promoters in which the AT-rich region from -17 to -22 is interrupted by several GC base pairs showed weak binding. Kinetic studies indicated that the presence of extended AT-rich sequence slows the dissociation rate constant of the polymerase-promoter complex and slightly stimulates the association rate constant, thereby increasing the stability of the complex. Measurement of the transcription activity revealed that the extended AT-rich region does not affect the kinetics of abortive synthesis up to the formation of 8-nucleotide RNA but causes accumulation of longer abortive products between 9 and 13 nucleotides. The observed effects of the upstream DNA region were AT sequence-specific, and the results suggested a larger role for the extended AT-rich sequence that has been unappreciated previously. We propose that the AT-rich DNA sequence upstream of -17 plays a role in modulating the efficiency of transcription initiation by affecting both the affinity of T7 RNA polymerase for the promoter and the efficiency of promoter clearance.