Emerging evidence suggests that components of the ubiquitin-proteasome system are involved in the regulation of gene expression. A variety of factors, including transcriptional activators, coactivators, and histones, are controlled by ubiquitylation, but the mechanisms through which this modification can function in transcription are generally unknown. Here, we report that the Saccharomyces cerevisiae protein Asr1 is a RING finger ubiquitin-ligase that binds directly to RNA polymerase II via the carboxyl-terminal domain (CTD) of the largest subunit of the enzyme. We show that interaction of Asr1 with the CTD depends on serine-5 phosphorylation within the CTD and results in ubiquitylation of at least 2 subunits of the enzyme, Rpb1 and Rpb2. Ubiquitylation by Asr1 leads to the ejection of the Rpb4/Rpb7 heterodimer from the polymerase complex and is associated with inactivation of polymerase function. Our data demonstrate that ubiquitylation can directly alter the subunit composition of a core component of the transcriptional machinery and provide a paradigm for how ubiquitin can influence gene activity.