Transcription antitermination is an important mechanism that can control regulation of gene expression. The N protein of lambdoid phages modifies the transcription elongation complex (EC) and helps it to overcome downstream terminators. In this modified EC, the C-terminal domain of N makes specific interactions with RNA polymerase (RNAP). The interacting surface of RNAP for N is unknown. Here, we report five mutations in the beta (G1045D) and beta' (P251S, P254L, R270C and G336S) subunits of RNAP that are specifically defective for antitermination by N protein of the lambdoid phage, H-19B. A mutation in the C-terminal domain of N, L108F, suppresses the defect of beta'-P254L. Purified mutant holoenzymes exhibit less processive antitermination. The amino acid substitutions in the mutant RNAPs cluster very close to the RNA:DNA hybrid at the beginning of the RNA-exit channel of the EC. We suggest that the action of H-19B N is exerted through the region defined by these amino acids. Wild-type N stabilizes the EC at terminator sites and in this modified EC a part of the terminator hairpin may form but appears to be unstable. We propose that the action of N close to the active center alters the RNAP-nucleic acid interactions around the RNA:DNA hybrid, which impairs proper folding of the terminator hairpin or stabilizes the weak RNA:DNA hybrid, or both.