The Saccharomyces cerevisiae transcription factor IIH (TFIIH) is essential both for transcription by RNA polymerase II (RNAP II) and for nucleotide excision repair (NER) of damaged DNA. We have established cell extracts which support RNAP II transcription from the yeast CYC1 promoter or NER of transcriptionally silent damaged DNA on independent plasmid templates and substrates. When plasmid templates and substrates for both processes are simultaneously incubated with these extracts, transcription is significantly inhibited. This inhibition is strictly dependent on active NER and can be complemented with purified holo-TFIIH. These results suggest that in the presence of active NER, TFIIH is preferentially mobilized from the basal transcription machinery for use in NER. Inhibition of transcription in the presence of active NER requires the RAD26 gene, the yeast homolog of the human Cockayne syndrome group B gene (CSB).