The human immunodeficiency virus encodes the transcriptional transactivator Tat, which binds to the transactivation response (TAR) RNA stem-loop in the viral long terminal repeat (LTR) and increases rates of elongation rather than initiation of transcription by RNA polymerase II (Pol II). In this study, we demonstrate that Tat binds directly to the cyclin-dependent kinase 7 (CDK7), which leads to productive interactions between Tat and the CDK-activating kinase (CAK) complex and between Tat and TFIIH. Tat activates the phosphorylation of the carboxy-terminal domain (CTD) of Pol II by CAK in vitro. The ability of CAK to phosphorylate the CTD can be inhibited specifically by a CDK7 pseudosubstrate peptide that also inhibits transcriptional activation by Tat in vitro and in vivo. We conclude that the phosphorylation of the CTD by CAK is essential for Tat transactivation. Our data identify a cellular protein that interacts with the activation domain of Tat, demonstrate that this interaction is critical for the function of Tat, and provide a mechanism by which Tat increases the processivity of Pol II.