Interactions of RNA polymerase (RNAP) with nucleic acids must be tightly controlled to ensure precise and processive RNA synthesis. The RNAP β'-subunit Switch-2 (SW2) region is part of a protein network that connects the clamp domain with the RNAP body and mediates opening and closing of the active center cleft. SW2 interacts with the template DNA near the RNAP active center and is a target for antibiotics that block DNA melting during initiation. Here, we show that substitutions of a conserved Arg339 residue in the Escherichia coli RNAP SW2 confer diverse effects on transcription that include defects in DNA melting in promoter complexes, decreased stability of RNAP/promoter complexes, increased apparent K(M) for initiating nucleotide substrates (2- to 13-fold for different substitutions), decreased efficiency of promoter escape, and decreased stability of elongation complexes. We propose that interactions of Arg339 with DNA directly stabilize transcription complexes to promote stable closure of the clamp domain around nucleic acids. During initiation, SW2 may cooperate with the σ(3.2) region to stabilize the template DNA strand in the RNAP active site. Together, our data suggest that SW2 may serve as a key regulatory element that affects transcription initiation and RNAP processivity through controlling RNAP/DNA template interactions.