The largest subunit of RNA polymerase II (RNAP II) contains a remarkable region of tandem heptapeptide repeats of the consensus sequence Tyr-Ser-Pro-Thr-Ser-Pro-Ser at its carboxyl terminus. This COOH-terminal domain (CTD) is unphosphorylated in RNAP IIA, extensively phosphorylated in RNAP IIO, and absent in RNAP IIB. The reversible phosphorylation of the CTD has been proposed to be integral to each cycle of transcription from the adenovirus-2 major late promoter. The adenovirus-2 major late promoter, however, may not be a good paradigm for the study of CTD function because in vitro transcription from this promoter is not dependent on the CTD. Previous studies suggest that transcription from the murine dihydrofolate reductase (DHFR) promoter requires the CTD. In an effort to investigate the role of the CTD and its phosphorylation, a RNAP II-dependent reconstituted transcription system specific for the DHFR promoter was established. In this reconstituted system, RNAP IIA, but not RNAP IIB, can transcribe from the DHFR promoter. Furthermore, RNAP IIB does not compete with RNAP IIA for preinitiation complex assembly. These results suggest that the CTD plays a critical role in the recruitment of RNAP II to the DHFR promoter. The analysis of preinitiation complexes assembled on the DHFR promoter indicates that RNAP IIA readily assembles into functional preinitiation complexes in contrast to the inefficient assembly of RNAP IIO. However, transcript elongation is catalyzed by RNAP IIO as demonstrated by the photoactivated cross-linking of nascent DHFR transcripts to subunit IIo. These results indicate that transcription from the DHFR promoter involves the reversible phosphorylation of the CTD and support the idea that RNAPs IIA and IIO have essential but distinct functions.