Lipid/DNA complexes or Lipoplexes have been characterized by various biochemical and biophysical methods to understand the physical basis of transfection. Here we have addressed the effect of cationic liposomes, 1,2-dioleoyl-3-trimethylammonium-propane (DOTAP), on transcription of DNA templates in vitro. Transcriptional activity of DNA-dependent RNA polymerase at DNA templates complexed with the cationic lipid varied as a function of charge ratio of lipid/DNA. At low charge ratios of 0.3:1 lipid/DNA and up to 1:1, we observed stimulation in transcription, while at higher charge ratios of lipid/DNA 3:1, complete inhibition in the activity occurred. Cetyl tri-methyl ammonium bromide (CTAB), a cationic detergent, and polyethylenimine (PEI), a cationic polymer, also bring about similar changes although to a lesser extent. The stimulation in transcription motivated us to probe into the molecular nature of the lipid/DNA interactions by absorbance spectroscopy and circular dichroism (CD). Upon interaction with lipids, hyperchromicity and susceptibility to micrococcal nuclease has increased, which suggests that the DNA was partially denatured. On complexation with the cationic lipid (DOTAP), the magnitude of the positive band in CD spectra decreased, accompanied with a red shift, as a function of charge ratio. Results from spectroscopic and enzyme assays suggest that at low charge ratios DNA may be partially unwound.