General transcription factor SIII, a heterotrimer composed of 110-kDa (p110), 18-kDa (p18), and 15-kDa (p15) subunits, increases the catalytic rate of transcribing RNA polymerase II by suppressing transient pausing by polymerase at multiple sites on DNA templates. Here we report molecular cloning and biochemical characterization of the SIII p18 subunit, which is found to be a member of the ubiquitin homology (UbH) gene family and functions as a positive regulatory subunit of SIII. p18 is a 118-amino acid protein composed of an 84-residue N-terminal UbH domain fused to a 34-residue C-terminal tail. Mechanistic studies indicate that p18 activates SIII transcriptional activity above a basal level inherent in the SIII p110 and p15 subunits. Taken together, these findings establish a role for p18 in regulating the activity of the RNA polymerase II elongation complex, and they bring to light a function for a UbH domain protein in transcriptional regulation.