The multifunctional RNA-dependent RNA polymerase L protein of vesicular stomatitis virus catalyzes unconventional pre-mRNA capping via the covalent enzyme-pRNA intermediate formation, which requires the histidine–arginine (HR) motif in the polyribonucleotidyltransferase domain. Here, the effects of cap-defective mutations in the HR motif on transcription were analyzed using an in vitro reconstituted transcription system. The wild-type L protein synthesized the leader RNA from the 3′-end of the genome followed by 5′-capped and 3′-polyadenylated mRNAs from internal genes by a stop–start transcription mechanism. Cap-defective mutants efficiently produced the leader RNA, but displayed aberrant stop–start transcription using cryptic termination and initiation signals within the first gene, resulting in sequential generation of ∼40-nucleotide transcripts with 5′-ATP from a correct mRNA-start site followed by a 28-nucleotide transcript and long 3′-polyadenylated transcript initiated with non-canonical GTP from atypical start sites. Frequent transcription termination and re-initiation within the first gene significantly attenuated the production of downstream mRNAs. Consistent with the inability of these mutants in in vitro mRNA synthesis and capping, these mutations were lethal to virus replication in cultured cells. These findings indicate that viral mRNA capping is required for accurate stop–start transcription as well as mRNA stability and translation and, therefore, for virus replication in host cells.