The RNA polymerase II large subunit carboxy-terminal domain (CTD) plays a role in transcription initiation, but its mechanism of action is not well understood. We have investigated the function of the SRB2 gene, which was isolated as a dominant suppressor of CTD truncation mutations. The allele specificity of this suppressor indicates that SRB2 and the CTD are involved in the same function. Indeed, cells lacking SRB2 and cells lacking a large portion of the CTD exhibit the same set of conditional growth phenotypes and exhibit very similar defects in gene expression in vivo. The SRB2 protein is a novel transcription factor that has an important role in basal and activated transcription in vitro and is essential for efficient establishment of the transcription initiation apparatus. Template commitment experiments suggest that SRB2 becomes physically associated with the transcription initiation complex. We find that SRB2 binds specifically to TFIID. As SRB2 and the RNA polymerase II CTD are involved in the same function, these results reveal a functional link between the CTD and the TATA-binding factor. This study implicates the CTD in recruitment of RNA polymerase II to the transcription initiation complex.