The Rpb4 and Rpb7 subunits of eukaryotic RNA polymerase II (RNAPII) participate in a variety of processes from transcription, DNA repair, mRNA export and decay, to translation regulation and stress response. However, their mechanism(s) of action remains unclear. Here, we show that the Rpb4/7 heterodimer in Saccharomyces cerevisiae plays a key role in controlling phosphorylation of the carboxy terminal domain (CTD) of the Rpb1 subunit of RNAPII. Proper phosphorylation of the CTD is critical for the synthesis and processing of RNAPII transcripts. Deletion of RPB4, and mutations that disrupt the integrity of Rpb4/7 or its recruitment to the RNAPII complex, increased phosphorylation of Ser2, Ser5, Ser7 and Thr4 within the CTD. RPB4 interacted genetically with genes encoding CTD phosphatases (SSU72, FCP1), CTD kinases (KIN28, CTK1, SRB10) and a prolyl isomerase that targets the CTD (ESS1). We show that Rpb4 is important for Ssu72 and Fcp1 phosphatases association, recruitment and/or accessibility to the CTD, and that this correlates strongly with Ser5P and Ser2P levels, respectively. Our data also suggest that Fcp1 is the Thr4P phosphatase in yeast. Based on these and other results, we suggest a model in which Rpb4/7 helps recruit and potentially stimulate the activity of CTD-modifying enzymes, a role that is central to RNAPII function.