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Engineered molecular circuits that process information in biological systems could address emerging human health and biomanufacturing needs. However, such circuits can be difficult to rationally design and scale. DNA-based strand displacement reactions have demonstrated the largest and most computationally powerful molecular circuits to date but are limited in biological systems due to the difficulty in genetically encoding components. Here, we develop scalable cotranscriptionally encoded RNA strand displacement (ctRSD) circuits that are rationally programmed via base pairing interactions. ctRSD circuits address the limitations of DNA-based strand displacement circuits by isothermally producing circuit components via transcription. We demonstrate circuit programmability in vitro by implementing logic and amplification elements, as well as multilayer cascades. Furthermore, we show that circuit kinetics are accurately predicted by a simple model of coupled transcription and strand displacement, enabling model-driven design. We envision ctRSD circuits will enable the rational design of powerful molecular circuits that operate in biological systems, including living cells.