During transcription, the catalytic core of RNA polymerase (RNAP) must interact with the DNA template with low-sequence specificity to ensure efficient enzyme translocation and RNA extension. Unexpectedly, recent structural studies of bacterial promoter complexes revealed specific interactions between the nontemplate DNA strand at the downstream edge of the transcription bubble (CRE, core recognition element) and a protein pocket formed by core RNAP (CRE pocket). We investigated the roles of these interactions in transcription by analyzing point amino acid substitutions and deletions in Escherichia coli RNAP. The mutations affected multiple steps of transcription, including promoter recognition, RNA elongation and termination. In particular, we showed that interactions of the CRE pocket with a nontemplate guanine immediately downstream of the active center stimulate RNA-hairpin-dependent transcription pausing but not other types of pausing. Thus, conformational changes of the elongation complex induced by nascent RNA can modulate CRE effects on transcription. The results highlight the roles of specific core RNAP–DNA interactions at different steps of RNA synthesis and suggest their importance for transcription regulation in various organisms.