The RNA-dependent RNA polymerase of influenza virus transcribes messenger RNA through a unique cap scavenging mechanism. Viral enzyme binds to the cap structure of host mRNA, cleaves the molecule 9-15 bases downstream of the cap, and uses the short capped oligonucleotide as a primer for mRNA synthesis. Previously, we have shown that the viral polymerase can efficiently bind capped RNAs shorter than 9 nucleotides in length, but the viral enzyme can not utilize these RNAs as primers. For this reason, these short capped oligonucleotides are potent inhibitors of influenza virus transcription. In these studies, it is now shown that short capped oligomers inhibit capped-RNA dependent transcription at the initial step of cap binding. In contrast, low concentrations of these short capped RNAs can actually stimulate viral transcription primed with high concentrations of the dinucleotide ApG. Another capped RNA derivative containing phosphorothioate oligonucleotides was also investigated as a potential polymerase inhibitor. This longer capped RNA was able to bind to the polymerase, but could not be cleaved to primer length by the enzyme associated endonuclease. Thus, the capped phosphorothioate RNA inhibited cap-primed transcription at the step of cap binding. However, in contrast to the short capped oligonucleotide, it also inhibited ApG primed viral transcription.