We used a transcriptional run-on assay in permeabilized yeast cells to study the distribution of RNA polymerase II (pol II) complexes before and after activation by Gal4. Polymerases were found engaged on the gene at the 5' end before activation, but only appeared at the 3' end after activation. Mutations of the pol II C-terminal domain (CTD), the CTD kinase Kin28 and the holoenzyme subunit Srb2 all inhibited the formation of 3' polymerases in response to activator. However, these mutations did not inhibit the establishment of polymerases at the 5' end. The differences between 3' and 5' ternary complexes suggest that they represent qualitatively distinct 'activated' and 'non-activated' forms of polymerase. The results implicate CTD phosphorylation in a switch from 'non-activated' transcription, which is confined to the 5' end, to an 'activated' mode that traverses the length of the gene.