Diverse classes of noncoding RNA, including small nuclear RNAs (snRNAs), play fundamental regulatory roles at many stages of gene expression. For example, recent studies have implicated 7SK RNA and components of the splicing apparatus in the regulation of transcriptional elongation. Here we present the first evidence of the involvement of an snRNA in the regulation of transcriptional initiation. We demonstrate that TFIIH, a general transcription initiation factor, specifically associates with U1 snRNA, a core-splicing component. Analysis of the TFIIH-dependent stages of transcription in a reconstituted system demonstrates that U1 stimulates the rate of formation of the first phosphodiester bond by RNA polymerase II. In addition, a promoter-proximal 5' splice site recognized by U1 snRNA stimulates TFIIH-dependent reinitiation of productive transcription. Our results suggest that U1 snRNA functions in regulating transcription by RNA Polymerase II in addition to its role in RNA processing.