Many mammalian genes are occupied by paused RNA polymerase II (pol II) in the promoter-proximal region on both sides of the transcription start site. However, the impact of pol II pausing on gene expression and cell biology is not fully understood. In this study, we used a Cre-Lox system to conditionally knock out the b subunit of mouse negative elongation factor (Nelf-b), a key pol II-pausing factor, in mouse embryonic fibroblasts. We found that Nelf-b was associated with the promoter-proximal region of the majority of expressed genes, yet genetic ablation of Nelf-b only affected the steady-state mRNA levels of a small percentage of the Nelf-b-associated genes. Interestingly, Nelf-b deletion also increased levels of transcription start site upstream transcripts at multiple negative elongation factor-associated genes. The direct target genes of Nelf-b were highly enriched with those involved in the control of cell growth and cell death. Correspondingly, Nelf-b knock-out mouse embryonic fibroblasts exhibited slower progression from quiescence to proliferation, as well as in a cycling cell population. Furthermore, Nelf-b deletion also resulted in increased apoptosis. Thus, the genetic and genomic studies provide new physiological and molecular insight into Nelf-mediated pol II pausing.