The function of human TFIIH-associated Cdk7 in RNA polymerase II (Pol II) transcription and C-terminal domain (CTD) phosphorylation was investigated in analogue-sensitive Cdk7(as/as) mutant cells where the kinase can be inhibited without disrupting TFIIH. We show that both Cdk7 and Cdk9/PTEFb contribute to phosphorylation of Pol II CTD Ser5 residues on transcribed genes. Cdk7 is also a major kinase of CTD Ser7 on Pol II at the c-fos and U snRNA genes. Furthermore, TFIIH and recombinant Cdk7-CycH-Mat1 as well as recombinant Cdk9-CycT1 phosphorylated CTD Ser7 and Ser5 residues in vitro. Inhibition of Cdk7 in vivo suppressed the amount of Pol II accumulated at 5' ends on several genes including c-myc, p21, and glyceraldehyde-3-phosphate dehydrogenase genes, indicating reduced promoter-proximal pausing or polymerase "leaking" into the gene. Consistent with a 5' pausing defect, Cdk7 inhibition reduced recruitment of the negative elongation factor NELF at start sites. A role of Cdk7 in regulating elongation is further suggested by enhanced histone H4 acetylation and diminished histone H4 trimethylation on lysine 36-two marks of elongation-within genes when the kinase was inhibited. Consistent with a new role for TFIIH at 3' ends, it was detected within genes and 3'-flanking regions, and Cdk7 inhibition delayed pausing and transcription termination.