The cyclic peptide antibiotic tyrocidine, synthesized by Bacillus brevis (ATCC 8185), inhibits RNA synthesis in an in vitro transcriptional system by forming a complex with the DNA. 2. The linear peptide antibiotic gramicidin, synthesized by the same strain, reverses at least partly this inhibition. The molecular mechanism of this reactivation is unknown. Gramicidin by itself inhibits transcription in vitro. This inhibition is not due to a complex formation between DNA and the peptide. 4. A possible regulative role of the two peptides in sporulation is discussed.