The telomeres of vaccinia virus DNA are transcribed at late times after infection. Analysis of cDNAs of RNA transcripts of the terminal loop region of the viral DNA shows that both inverted and complementary forms of the terminal loop region are transcribed. These late RNAs, which contain 5' poly(A) sequences, do not appear to encode any proteins. The transcriptional start sites for most of these RNAs are within the sequences that direct the resolution of concatemeric DNA replication intermediates (M. Merchlinsky and B. Moss, 1989, J. Virol. 63, 4354-4361). This suggests that the process of DNA resolution may involve transcription initiated from the telomere sequences required for resolution.