Cleavage and polyadenylation define the 3 ends of almost all eukaryotic mRNAs and are thought to occur during transcription. We describe a human in vitro system utilizing an immobilized template, in which transcripts in RNA polymerase II elongation complexes are efficiently cleaved and polyadenylated. Because the cleavage rate of free RNA is much slower, we conclude that cleavage is functionally coupled to transcription. Inhibition of positive transcription elongation factor b (P-TEFb) had only a modest negative effect on cleavage, as long as transcripts were long enough to contain the polyadenylation signal. In contrast, removal of the carboxyl-terminal domain of the large subunit of RNA polymerase II had a dramatic negative effect on cleavage. Unexpectedly, the 5 portion of transcript after cleavage remained associated with the template in a functional, polyadenylation-competent complex. Efficient cleavage required 5 capping by the human capping enzyme, but the reduction of cleavage seen of transcripts in COOH-terminal domain-less polymerase elongation complexes, was not because of lack of capping.Processing of eukaryotic mRNA starts during transcription and is influenced by the RNA polymerase II elongation complex (1, 2). Capping, polyadenylation, and splicing have been seen to occur on nascent transcripts in vitro, and a variety of in vivo and in vitro approaches have strongly implicated the carboxyl-terminal domain (CTD) 2 of the large subunit of RNA polymerase II in connecting transcription with these events (3-6). Whereas many of the factors required for mRNA processing have been identified and characterized, much less is known about how the processing and transcription machinery functionally influence each other.3Ј End formation is linked to transcription. Although RNA polymerase II is capable of transcribing hundreds of kilobase pairs in a completely processive manner, after transcribing a functional polyadenylation signal the polymerase usually terminates within 1 kb (3, 7) in a process that requires the CTD (8, 9). Factors required for polyadenylation have been found to associate with isolated transcription complexes (10) and the CTD has been implicated in bringing in the factors (11, 12). There is some controversy about when polyadenylation factors associate with the transcription complex. Polyadenylation factors have been found to associate with promoter binding factors (13), and yeast chromatin immunoprecipitation experiments in one study have localized the factors throughout the gene (11), but in another only at the 3Ј end of genes after the passage of a functional polyadenylation signal (14). Recent studies in yeast (15), Drosophila (16), and Xenopus (17) have implicated the CTD kinase positive transcription elongation factor b (P-TEFb) in promoting efficient polyadenylation. Drosophila histone mRNA 3Ј end formation, involving a completely different set of factors, was found not to be stimulated by having the RNA in an elongation complex (18). However, a strong transcriptional pause was found a...