Negative elongation factor (NELF) is a human transcription factor complex that cooperates with DRB sensitivity-inducing factor (DSIF)/hSpt4-hSpt5 to repress elongation by RNA polymerase II (RNAPII). NELF activity is associated with five polypeptides, including NELF-A, a candidate gene product for Wolf-Hirschhorn syndrome, and NELF-E, a putative RNA-binding protein with arginine-aspartic acid (RD) dipeptide repeats. Here we report several important findings regarding the DSIF/NELF-dependent elongation control. First, we have established an effective method for purifying the active NELF complex using an epitope-tagging technique. Second, the five polypeptides each are important and together are sufficient for its function in vitro. Third, NELF does not bind to either DSIF or RNAPII alone but does bind to the preformed DSIF/RNAPII complex. Fourth, NELF-E has a functional RNA-binding domain, whose mutations impair transcription repression without affecting known protein-protein interactions. Taken together, we propose that NELF causes RNAPII pausing through binding to the DSIF/RNAPII complex and to nascent transcripts. These results also have implications for how DSIF and NELF are regulated in a gene-specific manner in vivo.