The general transcription factor TFIIE plays important roles in transcription initiation and in the transition to elongation. However, little is known about its function during these steps. Here we demonstrate for the first time that TFIIH-mediated phosphorylation of RNA polymerase II (Pol II) is essential for the transition to elongation. This phosphorylation occurs at serine position 5 (Ser-5) of the carboxy-terminal domain (CTD) heptapeptide sequence of the largest subunit of Pol II. In a human in vitro transcription system with a supercoiled template, this process was studied using a human TFIIE (hTFIIE) homolog from Caenorhabditis elegans (ceTFIIE␣ and ceTFIIE). ceTFIIE could partially replace hTFIIE, whereas ceTFIIE␣ could not replace hTFIIE␣. We present the studies of TFIIE binding to general transcription factors and the effects of subunit substitution on CTD phosphorylation. As a result, ceTFIIE␣ did not bind tightly to hTFIIE, and ceTFIIE showed a similar profile for binding to its human counterpart and supported an intermediate level of CTD phosphorylation. Using antibodies against phosphorylated serine at either Ser-2 or Ser-5 of the CTD, we found that ceTFIIE induced Ser-5 phosphorylation very little but induced Ser-2 phosphorylation normally, in contrast to wild-type hTFIIE, which induced phosphorylation at both Ser-2 and Ser-5. In transcription transition assays using a linear template, ceTFIIE was markedly defective in its ability to support the transition to elongation. These observations provide evidence of TFIIE involvement in the transition and suggest that Ser-5 phosphorylation is essential for Pol II to be in the processive elongation form.In eukaryotes, transcription of protein-encoding genes by RNA polymerase II (Pol II) is the first step in expression of those genes (for reviews, see references 4, 35, 44, and 51). Two sequential stages are now recognized in the establishment of Pol II processivity: transcription initiation and the transition from initiation to elongation. At initiation, five general transcription factors (TFIIB, TFIID, TFIIE, TFIIF, and TFIIH) together with Pol II form the preinitiation complex (PIC) on the core promoter. Two models of PIC formation have been proposed on the basis of recent analyses. One model involves stepwise association of the general transcription factors and Pol II on promoter DNA, while the other model entails promoter sequences binding to a preassembled Pol II holoenzyme that contains most of the general transcription factors as well as SRB (suppressor of RNA polymerase B)-and Med-containing complex (reviewed in references 3 and 22). In vitro analyses of stepwise assembly of the PIC using purified factors have demonstrated that TFIIE joins the complex at a position near the transcription start site (between positions Ϫ14 and Ϫ2), after Pol II and TFIIF have joined the complex (25, 49). TFIIE then recruits TFIIH, and these two factors stabilize and activate the PIC, resulting in isomerization of double-stranded (ds) promoter DNA (promoter me...