Fcp1 is an essential protein phosphatase that hydrolyzes phosphoserines within the C-terminal domain (CTD) of the largest subunit of RNA polymerase II (Pol II). Fcp1 plays a major role in the regulation of CTD phosphorylation and, hence, critically influences the function of Pol II throughout the transcription cycle. The basic understanding of Fcp1-CTD interaction has remained ambiguous because two different modes have been proposed: the ''dockingsite'' model versus the ''distributive'' mechanism. Here we demonstrate biochemically that Fcp1 recognizes and dephosphorylates the CTD directly, independent of the globular non-CTD part of the Pol II structure. We point out that the recognition of CTD by the phosphatase is based on random access and is not driven by Pol II conformation. Results from three different types of experiments reveal that the overall interaction between Fcp1 and Pol II is not stable but dynamic. In addition, we show that Fcp1 also interacts with a region on the polymerase distinct from the CTD. We emphasize that this non-CTD site is functionally distinct from the docking site invoked previously as essential for the CTD phosphatase activity of Fcp1. We speculate that Fcp1 interaction with the non-CTD site may mediate its stimulatory effect on transcription elongation reported previously.C-terminal domain dephosphorylation ͉ C-terminal domain hyperphosphorylation R NA polymerase II (Pol II) is distinguished from RNA polymerases I and III by the unique C-terminal domain (CTD) of its largest subunit, Rpb1 (1-3). The CTD, through its interaction with the Mediator complex, plays a central role in transcription activation (4-6), and it also plays critical roles in coupling mRNA synthesis to mRNA processing events, such as 5Ј capping, splicing, and 3Ј cleavage and polyadenylation (7,8). Composed of a tandemly repeated heptapeptide of the consensus sequence Y 1 S 2 P 3 T 4 S 5 P 6 S 7 , the CTD undergoes reversible phosphorylation (9-11). Whereas the hypophosphorylated Pol II isoform (Pol IIA) assembles with general transcription factors into the transcription preinitiation complex (12-14), the hyperphosphorylated isoform (Pol IIO) is the dominant species found in transcription elongation complexes in vivo (15)(16)(17). The phosphorylation state of the CTD is controlled by the activities of CTD-specific kinases and phosphatases. Several transcription factor-associated CTD kinases have been identified, including CDK7͞Kin28, CDK9͞Bur1͞Ctk1 and CDK8͞Srb10 (11,(18)(19)(20). Other kinases (e.g., Cdc2 kinase and mitogen-activated protein kinase 2) can phosphorylate the CTD in vitro, but their contributions to CTD phosphorylation in vivo are uncertain (18,(21)(22)(23).Pol IIO is believed to be dephosphorylated before it can recycle for another round of transcription initiation (13,14,21,24). Fcp1 was the first CTD phosphatase discovered to fulfill such a function (25, 26). Fcp1 was reported to remove phosphates specifically from the Pol II CTD, but not from the other phosphoproteins tested (25). The human and...