In vitro transcripts of vesicular stomatitis virus (VSV) were either 5'-terminally labeled by incorporation of [beta-(32)P]GTP or were selected on Hg-agarose after incorporation of gamma-thio-GTP. Capped RNAs ranged in size from 23 nucleotides, the shortest capped RNA detected, to full-length message size. The 5'-terminal sequences corresponded to those of N message and to a small amount of NS message. Approximately 14% of the capped N gene transcripts were terminated at positions 86 to 90 of the VSV genome, giving rise to specific, 36 to 40-nucleotide-long, capped RNA species. The GTP-initiated RNAs were short with a predominant 28-nucleotide-long RNA species. A minor portion was as large as mRNAs. Nucleotide sequence analyses of the short RNA revealed that it was specifically initiated at positon 91 of the VSV genome, 41 nucleotides within the N cistron. This corresponds exactly to the site where transcription of the 40-nucleotide-long, capped RNA terminated. Initiation with GTP at position 91 occurred at approximately the same frequency as termination of the capped RNA at position 90, suggesting that intracistronic initiation at position 91 may depend upon termination of transcription of the 5'-proximal region and therefore may be sequential. This unique RNA represents the first transcript of VSV which was initiated at an intracistronic site with GTP, and may also represent the first example of a transcript derived from a stop/start mechanism of VSV transcription in vitro. Although initiation occurred frequently at the beginning of the N cistron yielding 11 to 14-nucleotide-long, [beta-(32)P]ATP-labeled transcripts (D. F. Pinney and S. U. Emerson, J. Virol. 42:889-896, 1982), capping of these short RNAs was not detected. This suggests that transcripts may have to be 15 to 23 nucleotides long to be accepted as substrates by the guanyltransferase.