Studies of yeast transcription have revealed the widespread distribution of intergenic RNA polymerase II transcripts. These cryptic unstable transcripts (CUTs) are rapidly degraded by the nuclear exosome. Yeast RNA binding proteins Nrd1 and Nab3 direct termination of sn/snoRNAs and recently have also been implicated in premature transcription termination of the NRD1 gene. In this paper, we show that Nrd1 and Nab3 are required for transcription termination of CUTs. In nrd1 and nab3 mutants, we observe 3'-extended transcripts originating from CUT promoters but failing to terminate through the Nrd1- and Nab3-directed pathway. Nrd1 and Nab3 colocalize to regions of the genome expressing antisense CUTs, and these transcripts require yeast nuclear exosome and TRAMP components for degradation. Dissection of a CUT terminator reveals a minimal element sufficient for Nrd1- and Nab3-directed termination. These results suggest that transcription termination of CUTs directed by Nrd1 and Nab3 is a prerequisite for rapid degradation by the nuclear exosome.