DNA sequences capable of forming unusual secondary structures can be a source of genomic instability. In some cases that instability might be affected by transcription, as recently shown for the Z-DNA forming sequence (CG)14, which causes genomic instability both in mammalian cells and in bacteria, and this effect increases with its transcription. We have investigated the effect of this (CG)14 sequence on transcription with T7 RNA polymerase in vitro. We detected partial transcription blockage within the sequence; the blockage increased with negative supercoiling of the template DNA. This effect was not observed in a control self-complementary sequence of identical length and base composition as the (CG)14 sequence, when the purine–pyrimidine alternation required for Z-DNA formation was disrupted. These findings suggest that the inhibitory effect on T7 transcription results from Z-DNA formation in the (CG)14 sequence rather than from an effect of the sequence composition or from hairpin formation in either the DNA or the RNA product.