Capping of nascent pre-mRNAs is thought to be a prerequisite for productive elongation and associated serine 2 phosphorylation of the C-terminal domain (CTD) of RNA polymerase II (PolII). The mechanism mediating this link is unknown, but is likely to include the capping machinery and P-TEPb. We report that the fission yeast P-TEFb (Cdk9-Pch1) forms a complex with the cap-methyltransferase Pcm1 and these proteins colocalise on chromatin. Ablation of Cdk9 function through chemical genetics causes growth arrest and abolishes serine 2 phosphorylation on the PolII CTD. Strikingly, depletion of Pcm1 also leads to a dramatic decrease of phospho-serine 2. Chromatin immunoprecipitations show a severe decrease of chromatin-bound Cdk9-Pch1 when Pcm1 is depleted. On the contrary, Cdk9 is not required for association of Pcm1 with chromatin. Furthermore, compromising Cdk9 activity leads to a promoter-proximal PolII stalling and sensitivity to 6-azauracil, reflecting elongation defects. The in vivo data presented here strongly support the existence of a molecular mechanism where the cap-methyltransferase recruits P-TEFb to chromatin, thereby ensuring that only properly capped transcripts are elongated. ©2007 European Molecular Biology Organization.