Eukaryotic gene expression is commonly controlled at the level of RNA polymerase II (RNAPII) pausing subsequent to transcription initiation. Transcription elongation is stimulated by the positive transcription elongation factor b (P-TEFb) kinase, which is suppressed within the 7SK small nuclear ribonucleoprotein (7SK snRNP). However, the biogenesis and functional significance of 7SK snRNP remain poorly understood. Here, we report that LARP7, BCDIN3, and the noncoding 7SK small nuclear RNA (7SK) are vital for the formation and stability of a cell stress-resistant core 7SK snRNP. Our functional studies demonstrate that 7SK snRNP is not only critical for controlling transcription elongation, but also for regulating alternative splicing of pre-mRNAs. Using a transient expression splicing assay, we find that 7SK snRNP disintegration promotes inclusion of an alternative exon via the increased occupancy of P-TEFb, Ser2-phosphorylated (Ser2-P) RNAPII, and the splicing factor SF2/ASF at the minigene. Importantly, knockdown of larp7 or bcdin3 orthologues in zebrafish embryos destabilizes 7SK and causes severe developmental defects and aberrant splicing of analyzed transcripts. These findings reveal a key role for P-TEFb in coupling transcription elongation with alternative splicing, and suggest that maintaining core 7SK snRNP is essential for vertebrate development.C hallenging the once predominantly held view that RNA polymerase II (RNAPII) recruitment to promoters is the rate-limiting event in regulating eukaryotic transcription, several recent studies indicate that RNAPII pauses subsequently to transcription initiation at a large number of genes in Drosophila and in several cell lineages in humans (1). A paradigm for this type of control is the regulation of HIV-1 transcription, which is paused because of concerted actions of the negative transcription elongation factors (N-TEFs) (1, 2). The block is reversed by the positive transcription elongation factor b (P-TEFb), consisting of a heterodimer between the cyclin-dependent kinase 9 (Cdk9) and one of the four C-type cyclins (CycT1/T2a(b)/K) (2), which phosphorylates Ser2 within the multiple heptapeptide repeats YSPTSPS of the carboxy-terminal domain (CTD) of the Rpb1 subunit of RNAPII, as well as components of N-TEFs. Of note, P-TEFb is critical for expressing early embryonic genes in C. elegans (3), and experiments in yeast and Drosophila demonstrate that it is also vital for proper 3Ј end pre-mRNA processing (4, 5). Thus, regulating transcription elongation is a key checkpoint for modulating eukaryotic gene expression.P-TEFb exists in 2 mutually exclusive complexes that differ in their kinase activity (2). A transcriptionally inactive complex [referred to herein as 7SK small nuclear ribonucleoprotein (7SK snRNP)] contains P-TEFb, hexamethylene bisacetamide-induced protein (HEXIM) 1 (HEXIM1) and/or HEXIM2, the noncoding 7SK small nuclear RNA (7SK) and the La-related protein 7 (LARP7) (6-12). Therein, 7SK is a molecular scaffold, which binds HEXIM1, HEXIM2, and LARP7 d...