Sulphur mustard is a potent alkylating agent that causes severe vesication as well as systemic and genotoxic effects. Despite its long history as a chemical warfare agent, the mechanism of its toxicity remains unknown and no successful pharmacological intervention has yet been found. In this study we have examined the effects of mustard alkylation of DNA on transcriptional processes. Gel mobility shift analysis shows that mustard alkylation of the lac UV5 promoter increases the stability of the promoter-RNA polymerase binary complex. Following formation of the initiation complex and addition of elongation nucleotides, approximately 45% of the RNA polymerase in the initiated complex remained associated with the alkylated promoter, compared to only 7% remaining associated with the unalkylated promoter. For the RNA polymerase able to escape the initiation complex, mustard alkylation of the DNA template resulted in the production of truncated transcripts. Analysis of these truncated transcripts revealed that sulphur mustard alkylates DNA preferentially at 5'-AA, 5'-GG and 5'-GNC sequences on the DNA template strand and this is significantly different from the alkylation sites observed with nitrogen mustard. This study represents the first report at the molecular level of sulphur mustard-induced effects on transcriptional processes.