Phosphorylation of the C-terminal domain (CTD) of RNA polymerase II (RNAP II) is a dynamic process that regulates transcription and coordinates it with pre-mRNA processing. We show here that Rct1, a nuclear multidomain cyclophilin from Schizosaccharomyces pombe, is encoded by an essential gene that interacts with the CTD and regulates its phosphorylation in vivo. Downregulation of Rct1 levels results in increased phosphorylation of the CTD at both Ser2 and Ser5 and in a commensurate decrease in RNAP II transcription. In contrast, overexpression of Rct1 decreases phosphorylation on both sites. The close association of Rct1 with transcriptionally active chromatin suggests a role in regulation of RNAP II transcriptional activity. These data, together with the pleiotropic phenotype upon Rct1 deregulation, suggest that this multidomain cyclophilin is an important player in maintaining the correct phosphorylation code of the CTD and thereby regulating CTD function.Eukaryotic RNA polymerase II (RNAP II), the enzyme responsible for transcription of protein-coding genes, is a multisubunit complex. For accurate transcription, RNAP II is controlled by many factors through protein-protein interactions. RNAP II transcripts undergo extensive processing, including capping, splicing, and polyadenylation, which are tightly coordinated with transcription. There is now strong evidence that RNAP II coordinates these processing reactions and couples them to transcription. Specifically, the C-terminal domain (CTD) of the largest RNAP II subunit has a critical role in targeting pre-mRNA processing factors to emerging pre-mRNAs. Thus, the CTD coordinates transcription with pre-mRNA processing and is therefore subject to tight regulation during the transcription cycle (1,17,35,37,39,41,46,53).In all eukaryotes, the CTD consists of variable numbers of YSPTSPS heptapeptide repeats. During the transcription cycle, the CTD undergoes dynamic phosphorylation and dephosphorylation on Ser2 and Ser5. Transcription initiation requires an unphosphorylated CTD. Following initiation, the CTD becomes phosphorylated at Ser5, a modification that is necessary to initiate transcript elongation. Finally, extensive phosphorylation at Ser2 is accompanied by transcript elongation and termination. In addition to regulating RNAP II transcription, the CTD phosphorylation status is also important for coordination of transcription with pre-mRNA processing, in particular for recruitment of RNA-processing factors to nascent transcripts. The CTD associates in a phosphorylation-dependent manner directly or indirectly with a variety of pre-mRNA-processing factors, including 5Ј capping enzymes, splicing factors, and some components of the 3Ј end-processing machinery cycle (1, 17, 35, 37-39, 41, 46, 53).Recently, cis-trans isomerization of prolyl peptide bonds in the heptapeptide repeats has been revealed as an additional level of regulation of CTD structure and function, as it has been shown that three CTD-interacting proteins bind to the CTD only in an all-trans prol...