The positive transcription elongation factor b (P-TEFb), a complex of Cdk9 and cyclin T1/T2, stimulates transcription by phosphorylating RNA polymerase II. The 7SK small nuclear RNA, in cooperation with HEXIM1 protein, functions as a general polymerase II transcription regulator by sequestering P-TEFb into a large kinase-inactive 7SK/HEXIM1/P-TEFb complex. Here, determination and characterization of the functionally essential elements of human 7SK snRNA directing HEXIM1 and P-TEFb binding led to a new model for the assembly of the 7SK/HEXIM1/P-TEFb regulatory complex. We demonstrate that two structurally and functionally distinct protein binding elements located in the 5'- and 3'-terminal hairpins of 7SK support the in vivo recruitment of HEXIM1 and P-TEFb. Consistently, a minimal regulatory RNA composed of the 5' and 3' hairpins of 7SK can modulate polymerase II transcription in HeLa cells. HEXIM1 binds independently and specifically to the G24-C48/G60-C87 distal segment of the 5' hairpin of 7SK. Binding of HEXIM1 is a prerequisite for association of P-TEFb with the G302-C324 apical region of the 3' hairpin of 7SK that is highly reminiscent of the human immunodeficiency virus transactivation-responsive RNA.