During bacteriophage T7 infection a phage-specified RNA polymerase transcribes the late phage genes in two temporal classes (class II and class III). In this report, we show that the purified phage polymerase discriminates between the class II and class III promoters in vitro as a function of variables that alter the stability of the DNA helix. These variables include ionic strength, temperature, and the presence of denaturing agents such as dimethyl sulfoxide. In general, initiation at the class II promoters is preferentially inhibited as helix stability is increased. Conditions required for the establishment of salt-resistant transcription complexes by the T7 RNA polymerase have been determined; the establishment of stable complexes at the class II promoters requires the synthesis of a longer nascent RNA transcript than does formation of such complexes at the class III promoters. A comparison of the nucleotide sequences of several class II and class III promoters suggests certain features that may be responsible for the different responses of these promoters to helix destabilization. The conservation of structural features that are peculiar to the class II or class III promoters indicates that these features are important in regulation of T7 transcription in vivo. Experiments which bear on the physiological significance of these features are discussed.