The particle-associated reovirus polymerase synthesizes mRNA within only certain viral particle types. Reovirus cores, subviral particles lacking outer capsid proteins mu1, sigma3, and sigma1, produce mRNA and abortive transcripts. Reovirus virions, which contain complete outer capsids, cannot produce mRNA and produce few abortive transcripts. Recoated cores are virion-like particles generated by the addition of recombinant outer capsid proteins to cores. We used recoated cores to analyze transcriptional regulation by reovirus outer capsid proteins. Partially recoated particles, containing less than virion amounts of mu1 and sigma3, synthesized mRNA at levels inversely proportional to outer capsid protein levels. Fully recoated cores exhibited undetectable mRNA synthesis levels, as did virions. However, recoated cores produced high levels of abortive transcripts. Recoated core abortive transcripts remained particle-associated and appeared to inhibit further abortive transcript production. Proteolysis of recoated cores removing mu1 and sigma3 released accumulated abortive transcripts and relieved inhibition of mRNA and abortive transcript synthesis. These results suggest transcriptional elongation, but not initiation, is blocked by virion-like amounts of mu1 and sigma3. Particle-associated abortive transcripts may down-regulate transcriptional initiation. Minor outer capsid protein sigma1 had no demonstrable effect on transcriptional activities. Transcriptional regulation may ensure progeny virions do not compete with transcribing particles for ribonucleoside triphosphates.