The positive transcription elongation factor b (P-TEFb) regulates RNA polymerase II elongation. In cells, P-TEFb partitions between small active and larger inactive states. In the latter, HEXIM1 binds to 7SK snRNA and recruits as well as inactivates P-TEFb in the 7SK snRNP. Several stimuli can affect this P-TEFb equilibrium. In this study, we demonstrate that protein kinase C (PKC) phosphorylates the serine at position158 (S158) in HEXIM1. This phosphorylated HEXIM1 protein neither binds to 7SK snRNA nor inhibits P-TEFb. Phorbol esters or the engagement of the T cell antigen receptor, which activate PKC and the expression of the constitutively active (CA) PKCθ protein, which is found in T cells, inhibit the formation of the 7SK snRNP. All these stimuli increase P-TEFb-dependent transcription. In contrast, the kinase-negative PKCθ and the mutant HEXIM1 (S158A) proteins block effects of these PKC-activating stimuli. These results indicate that the phosphorylation of HEXIM1 by PKC represents a major regulatory step of P-TEFb activity in cells.