The C-terminal domain (CTD) of the largest subunit of RNA polymerase II (Pol II) is a regulatory hub for transcription and RNA processing. Here, we identify PHD-finger protein 3 (PHF3) as a regulator of transcription and mRNA stability that docks onto Pol II CTD through its SPOC domain. We characterize SPOC as a CTD reader domain that preferentially binds two phosphorylated Serine-2 marks in adjacent CTD repeats. PHF3 drives liquid-liquid phase separation of phosphorylated Pol II, colocalizes with Pol II clusters and tracks with Pol II across the length of genes. PHF3 knock-out or SPOC deletion in human cells results in increased Pol II stalling, reduced elongation rate and an increase in mRNA stability, with marked derepression of neuronal genes. Key neuronal genes are aberrantly expressed in Phf3 knock-out mouse embryonic stem cells, resulting in impaired neuronal differentiation. Our data suggest that PHF3 acts as a prominent effector of neuronal gene regulation by bridging transcription with mRNA decay.

CEITEC Central European Institute of Technology Masaryk University Brno Czech Republic

Comprehensive Cancer Center Medical University of Vienna Vienna Austria

Department of Biochemistry and Cell Biology Max Perutz Labs University of Vienna Vienna Biocenter Vienna Austria

Department of Biochemistry Faculty of Chemistry and Chemical Technology University of Ljubljana Ljubljana Slovenia

Department of Microbiology Immunobiology and Genetics Max Perutz Labs University of Vienna Vienna Biocenter Vienna Austria

Department of Radiation Oncology Medical University of Vienna Vienna Austria

Department of Structural and Computational Biology Max Perutz Labs University of Vienna Vienna Biocenter Vienna Austria

Institute of Molecular Biotechnology of the Austrian Academy of Sciences Vienna Austria

Institute of Science and Technology Austria Am Campus 1 Klosterneuburg Austria

National Centre for Biomolecular Research Faculty of Science Masaryk University Brno Czech Republic

Research Institute of Molecular Pathology Vienna Austria

The Berlin Institute for Medical Systems Biology Max Delbrück Center Berlin Germany

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