Activation-induced cytidine deaminase (AID) is a single-stranded DNA deaminase required for somatic hypermutation of immunoglobulin (Ig) genes, a key process in the development of adaptive immunity. Transcription provides a single-stranded DNA substrate for AID, both in vivo and in vitro. We present here an assay which can faithfully replicate all of the molecular features of the initiation of hypermutation of Ig genes in vivo. In this assay, which detects AID-mediated deamination in the context of transcription by Escherichia coli RNA polymerase, deamination targets either strand and declines in efficiency as the distance from the promoter increases. We show that AID binds DNA exposed by the transcribing polymerase, implicating the polymerase itself as the vehicle which distributes AID on DNA as it moves away from the promoter.