Abstract: Saccharomyces cerevisiae Gal11, a component of the holoenzyme of RNA polymerase II, interacts through its functional domains A and B with the small (Tfa2) and large (Tfa1) subunits of the general transcription factor (TF) IIE, respectively. We have recently suggested that Gal11 functions through a common pathway with TFIIE in transcriptional regulation (Sakurai, H., and Fukasawa, T. (1997) J. Biol. Chem. 272, 32663-32669). Here, we report that the activity of the TFIIH-associated kinase, responsible for phosphorylation of the largest subunit of RNA polymerase II at the carboxyl-terminal domain (CTD), is enhanced cooperatively by Gal11 and TFIIE. The enhancement of CTD phosphorylation was observed in the holoenzyme of RNA polymerase II, but not in its core enzyme. The stimulatory effect was completely abolished in the absence of either domain B of Gal11 or the Tfa1 subunit of TFIIE, suggesting that the domain B-Tfa1 interaction is necessary, if not sufficient, for an extensive phosphorylation of the CTD by TFIIH. Stimulation of basal transcription by Gal11 was coupled with enhancement of TFIIH-catalyzed CTD phosphorylation in a cell-free transcription system, suggesting that Gal11 activates transcription by stimulating the CTD phosphorylation in the cell.