IKAROS is a critical regulator of hematopoietic cell fate and its dynamic expression pattern is required for proper hematopoiesis. In collaboration with the Nucleosome Remodeling and Deacetylase (NuRD) complex, it promotes gene repression and activation. It remains to be clarified how IKAROS can support transcription activation while being associated with the HDAC-containing complex NuRD. IKAROS also binds to the Positive-Transcription Elongation Factor b (P-TEFb) at gene promoters. Here, we demonstrate that NuRD and P-TEFb are assembled in a complex that can be recruited to specific genes by IKAROS. The expression level of IKAROS influences the recruitment of the NuRD-P-TEFb complex to gene regulatory regions and facilitates transcription elongation by transferring the Protein Phosphatase 1α (PP1α), an IKAROS-binding protein and P-TEFb activator, to CDK9. We show that an IKAROS mutant that is unable to bind PP1α cannot sustain gene expression and impedes normal differentiation of Ik(NULL) hematopoietic progenitors. Finally, the knock-down of the NuRD subunit Mi2 reveals that the occupancy of the NuRD complex at transcribed regions of genes favors the relief of POL II promoter-proximal pausing and thereby, promotes transcription elongation.