A high level of transcription has been associated with elevated spontaneous mutation and recombination rates in eukaryotic organisms. To determine whether the transcription level is directly correlated with the degree of genomic instability, we have developed a tetracycline-regulated LYS2 reporter system to modulate the transcription level over a broad range in Saccharomyces cerevisiae. We find that spontaneous mutation rate is directly proportional to the transcription level, suggesting that movement of RNA polymerase through the target initiates a mutagenic process(es). Using this system, we also investigated two hypotheses that have been proposed to explain transcription-associated mutagenesis (TAM): (1) transcription impairs replication fork progression in a directional manner and (2) DNA lesions accumulate under high-transcription conditions. The effect of replication fork progression was probed by comparing the mutational rates and spectra in yeast strains with the reporter gene placed in two different orientations near a well-characterized replication origin. The effect of endogenous DNA damage accumulation was investigated by studying TAM in strains defective in nucleotide excision repair or in lesion bypass by the translesion polymerase Polzeta. Our results suggest that both replication orientation and endogenous lesion accumulation play significant roles in TAM, particularly in terms of mutation spectra.