Transcription is a fundamental step in gene expression, yet it remains poorly understood at a cellular level. Visualization of transcription sites and active genes has led to the suggestion that transcription occurs at discrete sites in the nucleus, termed transcription factories, where multiple active RNA polymerases are concentrated and anchored to a nuclear substructure. However, this concept is not universally accepted. This Review discusses the experimental evidence in support of the transcription factory model and the evidence that argues against such a spatially structured view of transcription. The transcription factory model has implications for the regulation of transcription initiation and elongation, for the organization of genes in the genome, for the co-regulation of genes and for genome instability.