The effect of aflatoxin B1 (AFB1) on the template function for RNA synthesis of several single and double-stranded synthetic DNAs containing cytosine (C) and/or hypoxanthine (H) bases is studied in vitro. The results indicate that AFB1, after liver microsome activation, strongly inhibits the template function of poly[d(I-C)] and has little, if any, effect on polydI.polydC, polydI, or polydC. This conclusion is reached whether rat liver nuclear free RNA polymerase or E. coli RNA polymerase is used for the transcription. The mechanism of this inhibition is believed mainly due to the inhibition of elongation of RNA synthesis, because autoradiography of the [alpha-32 P]GTP labeled RNAs after polyacrylamide gel electrophoresis clearly shows that the size of the RNA from AFB1 treated group is dramatically reduced. The evidence that the selective inhibition of poly[d(I-C)] template function is a direct reflection of the binding of AFB1 to poly[d(I-C)] is provided by the use of radioactive [3H]AFB1 for the binding and by spectrum analysis of the appearance of a broad AFB1-DNA adduct peak between 300 nm and 400 nm right after the typical DNA peak at 260 nm. These data, which are in direct support to our recent report (F.L. Yu, et al., Carcinogenesis, 11, 475-478, 1990), suggest that the binding of AFB1 prefers alternating, double-stranded DNA, and the binding affinity of AFB1 to DNA is greatly reduced when the bases are in either single- or double-stranded homopolymer forms.(ABSTRACT TRUNCATED AT 250 WORDS)