The fission yeast Schizosaccharomyces pombe has proved an important model system for cross-species comparative studies of many fundamental processes in the eukaryotic cell, such as cell cycle control and DNA replication. The RNA polymerase II transcription machinery is, however, still relatively poorly understood in S. pombe, partially due to the absence of a reconstituted in vitro transcription system. We have now purified S. pombe RNA polymerase II and its general initiation factors TFIIB, TFIIF, TFIIE, and TFIIH to near homogeneity. These factors enable RNA polymerase II to initiate transcription from the S. pombe alcohol dehydrogenase promoter (adh1p) when combined with Saccharomyces cerevisiae TATA-binding protein. We use our reconstituted system to examine effects of Mediator on basal transcription in vitro. S. pombe Mediator exists in two distinct forms, a free form, which contains the spSrb8, spTrap240, spSrb10, and spSrb11 subunits, and a smaller form, which lacks these four subunits and associates with RNA polymerase II to form a holoenzyme. We find that spSrb8/spTrap240/spSrb10/spSrb11 containing Mediator repress basal transcription, whereas Mediator lacking these subunits has a stimulatory effect on transcription. Our findings thus demonstrate that the spSrb8/spTrap240/spSrb10/spSrb11 subcomplex governs the ability of Mediator to stimulate or repress basal transcription in vitro.