The rho protein isolated from a strain of Escherichia coli with the rho1 (suA1) mutant allele is defective in interactions with RNA that are coupled to ATP hydrolysis. Here we show that the rho1 allele is partially dominant over wild-type and demonstrate that the mechanism of that dominance is due to an interference of wild-type rho factor function by the defective rho factor. The rho1 mutant protein can inhibit transcription termination and RNA-dependent ATPase activities of normal rho protein. Inhibition of the ATPase activity with excess RNA occurs by exchange of subunits to form hybrid hexamers in which the defective subunits apparently disrupt co-operative interactions essential for wild-type subunit function.