The cellular factor, LBP-1, can repress HIV-1 transcription by preventing the binding of TFIID to the promoter. Here we have analyzed the effect of recombinant LBP-1 on HIV-1 transcription in vitro by using a "pulse-chase" assay. LBP-1 had no effect on initiation from a preformed preinitiation complex and elongation to position +13 ("pulse"). However, addition of LBP-1 after RNA polymerase was stalled at +13 strongly inhibited further elongation ("chase") by reducing RNA polymerase processivity. Severe mutations of the high affinity LBP-1 binding sites between -4 and +21 did not relieve the LBP-1-dependent block. However, LBP-1 could bind independently to upstream low affinity sites (-80 to -4), suggesting that these sites mediate the effect of LBP-1 on elongation. These results demonstrate a novel function of LBP-1, restricting HIV-1 transcription at the level of elongation. In addition, Tat was found to suppress the antiprocessivity effect of LBP-1 on HIV-1 transcription in nuclear extracts. These findings strongly suggest that LBP-1 may provide a natural mechanism for restricting the elongation of HIV-1 transcripts and that this may be a target for the action of Tat in enhancing transcription.