Regulation of the elongation phase of RNA polymerase II transcription by P-TEFb is a critical control point for gene expression. The activity of P-TEFb is regulated, in part, by reversible association with one of two HEXIMs and the 7SK snRNP. A recent proteomics survey revealed that P-TEFb and the HEXIMs are tightly connected to two previously-uncharacterized proteins, the methyphosphate capping enzyme, MEPCE, and a La-related protein, LARP7. Glycerol gradient sedimentation analysis of lysates from cells treated with P-TEFb inhibitors, suggested that the 7SK snRNP reorganized such that LARP7 and 7SK remained associated after P-TEFb and HEXIM1 were released. Immunodepletion of LARP7 also depleted most of the 7SK regardless of the presence of P-TEFb, HEXIM or hnRNP A1 in the complex. Small interfering RNA knockdown of LARP7 in human cells decreased the steady-state level of 7SK, led to an initial increase in free P-TEFb and increased Tat transactivation of the HIV-1 LTR. Knockdown of LARP7 or 7SK ultimately caused a decrease in total P-TEFb protein levels. Our studies have identified LARP7 as a 7SK-binding protein and suggest that free P-TEFb levels are determined by a balance between release from the large form and reduction of total P-TEFb.