Bacterial RNA polymerase is a potent target for antibiotics, which utilize a plethora of different modes of action, some of which are still not fully understood. Ureidothiophene (Urd) was found in a screen of a library of chemical compounds for ability to inhibit bacterial transcription. The mechanism of Urd action is not known. Here, we show that Urd inhibits transcription at the early stage of closed complex formation by blocking interaction of RNA polymerase with the promoter –10 element, while not affecting interactions with –35 element or steps of transcription after promoter closed complex formation. We show that mutation in the region 1.2 of initiation factor σ decreases sensitivity to Urd. The results suggest that Urd may directly target σ region 1.2, which allosterically controls the recognition of –10 element by σ region 2. Alternatively, Urd may block conformational changes of the holoenzyme required for engagement with –10 promoter element, although by a mechanism distinct from that of antibiotic fidaxomycin (lipiarmycin). The results suggest a new mode of transcription inhibition involving the regulatory domain of σ subunit, and potentially pinpoint a novel target for development of new antibacterials.