Transcription consists of a series of highly regulated steps: assembly of the preinitiation complex (PIC) at the promoter, initiation, elongation, and termination. PIC assembly is nucleated by TFIID, a complex composed of the TATA-binding protein (TBP) and a series of TBP-associated factors (TAFs). One component, TAF7, is incorporated in the PIC through its interaction with TFIID but is released from TFIID upon transcription initiation. We now report that TAF7 interacts with the transcription factors, TFIIH and P-TEFb, resulting in the inhibition of their Pol II CTD kinase activities. Importantly, in in vitro transcription reactions, TAF7 inhibits steps after PIC assembly and formation of the first phosphodiester bonds. Further, in vivo TAF7 coelongates with P-TEFb and Pol II downstream of the promoter. We propose a model in which TAF7 contributes to the regulation of the transition from PIC assembly to initiation and elongation.MHC class I genes ͉ regulation ͉ transcription initiation I n eukaryotic cells, expression of protein-encoding genes depends on the ordered recruitment of the general transcription factors (GTF) TFIID, TFIIB, and TFIIA to the promoter, followed by association of Pol II, the mediator, and the remaining GTFs, TFIIF, TFIIE, and TFIIH, to form a preinitiation complex (PIC) (1). Once PIC assembly is complete, transcription initiation ensues; Pol II with the elongation complex dissociate from the PIC (2, 3). A required step during transcription initiation is the phosphorylation of serine 5 in the carboxy terminal domain (CTD) heptad repeat of Pol II by the kinase subunit of TFIIH, CDK7 (4, 5), after which Pol II pauses to ensure proper pre-mRNA capping (6-9). The transition from pausing to elongation is facilitated by the P-TEFb elongation complex, which also mediates efficient elongation (10). P-TEFb consists of two subunits, cyclin T1 and the kinase CDK9, which phosphorylates serine 2 of the CTD, required for productive elongation and the recruitment of complexes involved in mRNA processing (splicing and polyadenylation) (10-15).Although the general mechanics of transcription have been characterized, relatively little is known about how the transitions from PIC assembly to initiation/pausing to elongation are regulated. Promoter recognition is largely mediated by TFIID, which is composed of the TATA binding protein (TBP) and over a dozen TBP associated factors (TAFs) (16,17,18). The largest TFIID component, TAF1, has both acetyltransferase (AT) and kinase activities (19,20). We demonstrated that TAF1 and its intrinsic acetyltransferase activity are essential for transcription of an MHC class I gene (21). Importantly, MHC class I transcription is inhibited both in vitro and in vivo by the viral transactivator, HIV Tat, which binds to the TAF1 AT domain, inhibiting its enzymatic activity (22, 23). TAF7, a cellular 55-kDa TFIID component (24,25), also binds to TAF1 inhibiting its AT activity and repressing MHC class I transcription (26) Significantly, we have demonstrated that TAF7 remains boun...