Over the past years, a large number of histone posttranslational modifications have been described, some of which function to attain a repressed chromatin structure, while others facilitate activation by allowing access of regulators to DNA. Histone H2B monoubiquitination is a mark associated with transcriptional activity. Using a highly reconstituted chromatin-transcription system incorporating the inducible RARbeta2 promoter, we find that the establishment of H2B monoubiquitination by RNF20/40 and UbcH6 is dependent on the transcription elongation regulator complex PAF, the histone chaperone FACT, and transcription. H2B monoubiquitination facilitates FACT function, thereby stimulating transcript elongation and the generation of longer transcripts. These in vitro analyses and corroborating in vivo experiments demonstrate that elongation by RNA polymerase II through the nucleosomal barrier is minimally dependent upon (1) FACT and (2) the recruitment of PAF and the H2B monoubiquitination machinery.