Influenza A and B viruses share common sequences and potentially similar panhandle structures in the terminal noncoding regions of virion RNA (vRNA). Interesting differences exist, however, in the number of conserved nucleotides at the 5' and 3' ends of the vRNAs, in base pairs constituting the panhandle duplex, and the length of uridine stretch (U stretch) juxtaposed to the RNA duplex. To analyse the contribution of these signals to the specificity between the two viruses, a transient ribonucleoprotein transfection method was used for the expression of the chloramphenicol acetyltransferase (CAT) reporter gene flanked by the noncoding nucleotides derived from influenza B vRNA. While the base pairing in the RNA duplex was primarily important for template activity, mismatch mutations G11 x G12' and C12 x A13' in the terminal RNA duplex region were utilized by influenza B virus, whereas these mutations were detrimental for influenza A virus. Different activity profiles were observed in the length preference of the RNA duplexes: maximum template activity was observed with 11 base pairs for influenza B virus, and 8 base pairs for influenza A virus. When the mutants with various lengths of U stretch were tested, highest CAT activities were observed with 5 to 7 uridine residues in influenza A virus, whereas in influenza B virus the activity was drastically decreased with 7 uridine residues. We suggest that the specific interaction of influenza virus RNA polymerase with these noncoding cis-acting signals in transcription of the RNA genome, along with unique coding strategies adopted by influenza B virus, has contributed to the divergence of these two closely related viruses.