The C-terminal domain (CTD) of the largest subunit of RNA polymerase II (RNAPII) is heavily phosphorylated during the transition from transcription initiation to the establishment of an elongationcompetent transcription complex. FCP1 is the only phosphatase known to be specific for the CTD of the largest subunit of RNAPII, and its activity is believed to be required to reactivate RNAPII, so that RNAPII can enter another round of transcription. We demonstrate that FCP1 is a phosphoprotein, and that phosphorylation regulates FCP1 activities. FCP1 is phosphorylated at multiple sites in vivo. The CTD phosphatase activity of phosphorylated FCP1 is stimulated by TFIIF, whereas dephosphorylated FCP1 is not. In addition to its role in the recycling of RNAPII, FCP1 also affects transcription elongation. Phosphorylated FCP1 is more active in stimulating transcription elongation than the dephosphorylated form of FCP1. We found that only phosphorylated FCP1 can physically interact with TFIIF. We set out to purify an FCP1 kinase from HeLa cells and identified casein kinase 2, which, surprisingly, displayed a negative effect on FCP1-associated activities. N umerous studies have extensively documented the effects of phosphorylation on the transcriptional properties of RNA polymerase II (RNAPII) (1-5). The target of these regulatory phosphorylation events is the C-terminal domain (CTD) of the largest subunit of RNAPII. The hypophosphorylated form of RNAPII, designated RNAPIIA, was demonstrated to be essential for preinitiation complex formation and transcription initiation, whereas hyperphosphorylated RNAPII, designated RNAPIIO, is involved in transcription elongation (6, 7). During the transition from transcription initiation to elongation, the CTD of the largest subunit of the RNAPII is heavily phosphorylated at Ser-2 and Ser-5 within the multiply repeated consensus sequence YS 2 PTS 5 PS (2,4,8). The CTD of the mammalian protein contains 52 repeats, which are phosphorylated by a number of different protein kinases, including CDK7 (5, 9), CDK9 (10, 11), and CDK8 (3, 12). The CDK7 and CDK9 kinases are tightly linked to the transcription cycle. In contrast, the kinase activity of CDK8, a component of the Mediator complex, was shown to negatively regulate transcription initiation.Although multiple kinases target the CTD of RNAPII, the only protein phosphatase known to dephosphorylate the CTD is FCP1. FCP1 was identified in both mammalian cells (13-15) and Saccharomyces cerevisiae (16,17). Dephosphorylation of the CTD of the largest subunit of RNAPII by FCP1 can facilitate recycling of the hyperphosphorylated form of RNAPII, allowing RNAPII to enter another round of transcription (15). FCP1 dephosphorylates the CTD of the largest subunit of RNAPII in solution (14)(15)(16)(18)(19)(20) and when associated with transcription elongation complexes (15,21,22). The phosphatase activity of FCP1 is stimulated by the general transcription factor TFIIF; however, TFIIB inhibits this stimulation (14). Mapping of the interaction domains betwee...