We show that RNA polymerase (Pol) II prevents erroneous transcription in vitro with different strategies that depend on the type of DNA⋅RNA base mismatch. Certain mismatches are efficiently formed but impair RNA extension. Other mismatches allow for RNA extension but are inefficiently formed and efficiently proofread by RNA cleavage. X-ray analysis reveals that a T⋅U mismatch impairs RNA extension by forming a wobble base pair at the Pol II active center that dissociates the catalytic metal ion and misaligns the RNA 3′ end. The mismatch can also stabilize a paused state of Pol II with a frayed RNA 3′ nucleotide. The frayed nucleotide binds in the Pol II pore either parallel or perpendicular to the DNA-RNA hybrid axis (fraying sites I and II, respectively) and overlaps the nucleoside triphosphate (NTP) site, explaining how it halts transcription during proofreading, before backtracking and RNA cleavage.