Tat, the transactivator protein encoded by HIV-1, acts in vivo to increase transcriptional initiation and stabilize elongation. We examined the effects of purified, bacterially-expressed Tat on HIV-1 transcription in a cell-free system. Tat specifically stimulated HIV-directed transcription 12-fold in HeLa cell nuclear extracts and this effect was principally due to increased transcriptional elongation. The degree of transactivation was greatest at later times during the transcription reaction when basal levels of transcription were reduced. At early times, the proportion of basal transcriptional complexes that elongate efficiently was high. Ongoing transcription increased the number of complexes requiring Tat for efficient elongation, possibly due to the activation of a repressor(s). To examine this hypothesis, the effects of the detergent Sarkosyl on HIV transcription were studied. Sarkosyl stimulated HIV-1 transcription to a level similar to that occurring in the presence of Tat alone by improving elongation. Transcription was elevated by Sarkosyl at concentrations inhibitory to reinitiation indicating that inefficient elongation is due to transcriptional pausing. Transcriptional stimulation by Sarkosyl was a general phenomenon as it was also observed with heterologous eukaryotic promoters. Tat was capable of stimulating elongation from a heterologous promoter when Tat binding was provided by a downstream TAR element. We propose that Tat acts as a general transcription factor whose binding at the promoter overcomes inefficient transcriptional elongation.