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-beta-D-ribobenzimidazole-sensitivity inducing factor (DSIF). DSIF/NELF inhibits early transcript elongation until it is counteracted by the positive elongation factor P-TEFb. We report a previously undescribed activity of DSIF/NELF, namely inhibition of the transcript cleavage factor TFIIS. These two activities of DSIF/NELF appear to be mechanistically distinct. Inhibition of nucleotide addition requires > or = 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 back-tracked nascent RNA, TFIIS inhibition may help DSIF/NELF negatively regulate productive transcription.