Formation of productive transcription complexes after promoter escape by RNA polymerase II is a major event in eukaryotic gene regulation. Both negative and positive factors control this step. The principal negative elongation factor (NELF) contains four polypeptides and requires for activity the two-polypeptide 5,6-dichloro-1--D-ribobenzimidazole-sensitivity inducing factor (DSIF). DSIF͞ NELF inhibits early transcript elongation until it is counteracted by the positive elongation factor P-TEFb. We report a previously undescribed activity of DSIF͞NELF, namely inhibition of the transcript cleavage factor TFIIS. These two activities of DSIF͞NELF appear to be mechanistically distinct. Inhibition of nucleotide addition requires >18 nt of nascent RNA, whereas inhibition of TFIIS occurs at all transcript lengths. Because TFIIS promotes escape from promoter-proximal pauses by stimulating cleavage of backtracked nascent RNA, TFIIS inhibition may help DSIF͞NELF negatively regulate productive transcription.transcription elongation ͉ pausing ͉ backtracking R egulation of productive mRNA chain synthesis by RNA polymerase II (RNAPII) occurs when the RNA chain is Ϸ10-100 nt long and determines whether RNAPII forms a fully functional transcription elongation complex (TEC) or halts RNA synthesis during the early stages of transcript elongation (reviewed in refs. 1-5). Conversion to a productive TEC involves an ordered set of transitions that require successive phosphorylation of Ser-5 and Ser-2 in the RPB1 C-terminal heptapeptide repeat domain (CTD) by kinase components of TFIIH and positive elongation factor P-TEFb, respectively. These CTD changes orchestrate release of initiation factors, recruitment of general elongation and chromatin-modifying factors, and capping of the nascent transcript by the capping enzyme. Completion of these steps is required to produce a TEC able to transcribe through nucleosomes on a chromatin template and synthesize full-length pre-mRNAs.