Fidelity of template-dependent nucleic acid synthesis is the main determinant of stable heredity and error-free gene expression. The mechanism (or mechanisms) ensuring fidelity of transcription by DNA-dependent RNA polymerases (RNAPs) is not fully understood. Here, we show that the 3′ end–proximal nucleotide of the nascent transcript stimulates hydrolysis of the penultimate phosphodiester bond by providing active groups and coordination bonds to the RNAP active center. This stimulation is much higher in the case of misincorporated nucleotide. We show that during transcription elongation, the hydrolytic reaction stimulated by misincorporated nucleotides proofreads most of the misincorporation events and thus serves as an intrinsic mechanism of transcription fidelity.