Phage phi29 regulatory protein p4 activates transcription from the late A3 promoter and represses the main early promoters, named A2b and A2c. Activation involves stabilization of RNA polymerase (RNAP) at the A3 promoter as a closed complex and is mediated by interaction between RNAP and a small domain of protein p4 in which residue Arg120 plays an essential role. We show that protein p4 represses the A2c promoter by binding to DNA immediately upstream from RNAP in a way that does not hinder RNAP binding; rather, the two proteins bind cooperatively to DNA. In the presence of protein p4, RNAP can form an initiated complex at the A2c promoter that generates short abortive transcripts, but cannot leave the promoter. Mutation of protein p4 residue Arg120, which relieves the contact between the two proteins, leads to a loss of repression. Therefore, the contact between protein p4 and RNAP through the protein p4 domain containing Arg120 can activate or repress transcription, depending on the promoter. The relative position of protein p4 and RNAP, which is different at each promoter, together with the distinct characteristics of the two promoters, may determine whether protein p4 activates or represses transcription.