Gfh1, a transcription factor from Thermus thermophilus, inhibits all catalytic activities of RNA polymerase (RNAP). We characterized the Gfh1 structure, function and possible mechanism of action and regulation. Gfh1 inhibits RNAP by competing with NTPs for coordinating the active site Mg2+ ion. This coordination requires at least two aspartates at the tip of the Gfh1 N-terminal coiled-coil domain (NTD). The overall structure of Gfh1 is similar to that of the Escherichia coli transcript cleavage factor GreA, except for the flipped orientation of the C-terminal domain (CTD). We show that depending on pH, Gfh1-CTD exists in two alternative orientations. At pH above 7, it assumes an inactive 'flipped' orientation seen in the structure, which prevents Gfh1 from binding to RNAP. At lower pH, Gfh1-CTD switches to an active 'Gre-like' orientation, which enables Gfh1 to bind to and inhibit RNAP.