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In bacteriophage, transcription elongation is regulated by the N protein, which binds a nascent mRNA hairpin ( termed boxB) and enables RNA polymerase to read through distal terminators. We have examined the structure, energetics and in vivo function of a number of N boxB complexes derived from in vitro protein selection. Trp18 fully stacks on the RNA loop in the wild-type structure, and can become partially or completely unstacked when the sequence context is changed three or four residues away, resulting in a recognition interface in which the best binding residues depend on the sequence context. Notably, in vivo antitermination activity correlates with the presence of a stacked aromatic residue at position 18, but not with N boxB binding affinity. Our work demonstrates that RNA polymerase responds to subtle conformational changes in cis-acting regulatory complexes and that approximation of components is not sufficient to generate a fully functional transcription switch.