The DNA lesion 1,N(2)-ethenoguanine (1,N(2)-epsilon G) is formed endogenously as a by-product of lipid peroxidation or by reaction with epoxides that result from the metabolism of the industrial pollutant vinyl chloride, a known human carcinogen. DNA replication past 1,N(2)-epsilon G and site-specific mutagenesis studies on mammalian cells have established the highly mutagenic and genotoxic properties of the damaged base. However, there is as yet no information on the processing of this lesion during transcription. Here, we report the results of transcription past a site-specifically modified 1,N(2)-epsilon G DNA template. This lesion contains an exocyclic ring obstructing the Watson-Crick hydrogen-bonding edge of guanine. Our results show that 1,N(2)-epsilon G acts as a partial block to the bacteriophage T7 RNA polymerase (RNAP), which allows nucleotide incorporation in the growing RNA with the selectivity A>G>(C=-1 deletion)>>U. In contrast, 1,N(2)-epsilon G poses an absolute block to human RNAP II elongation, and nucleotide incorporation opposite the lesion is not observed. Computer modeling studies show that the more open active site of T7 RNAP allows lesion bypass when the 1,N(2)-epsilon G adopts the syn-conformation. This orientation places the exocyclic ring in a collision-free empty pocket of the polymerase, and the observed base incorporation preferences are in agreement with hydrogen-bonding possibilities between the incoming nucleotides and the Hoogsteen edge of the lesion. On the other hand, in the more crowded active site of the human RNAP II, the modeling studies show that both syn- and anti-conformations of the 1,N(2)-epsilon G are sterically impermissible. Polymerase stalling is currently believed to trigger the transcription-coupled nucleotide excision repair machinery. Thus, our data suggest that this repair pathway is likely engaged in the clearance of the 1,N(2)-epsilon G from actively transcribed DNA.