We have analyzed the function of an archaeal protein (now called transcription factor S (TFS)) that shows sequence similarity to eukaryotic transcription factor IIS (TFIIS) as well as to small subunits of eukaryotic RNA polymerases I (A12.6), II (B12.2), and III (C11). Western blot analysis with antibodies against recombinant TFS demonstrated that this protein is not a subunit of the RNA polymerase. In vitro transcription experiments with paused elongation complexes at position +25 showed that TFS is able to induce cleavage activity in the archaeal RNA polymerase in a similar manner to TFIIS. In the presence of TFS, the cleavage activity of the RNA polymerase truncates the RNA back to position +15 by releasing mainly dinucleotides from the 3'-end of the nascent RNA. Furthermore, TFS reduces the amount of non-chaseable elongation complexes at position +25 as well as position +45. These findings clearly demonstrate that this protein has a similar function to eukaryotic TFIIS.