The class II transactivator (CIITA) is the master integrator of expression of MHC class II genes. It interacts with variety of basal transcription factors to initiate and elongate transcription of these genes. Among others, it recruits positive transcription elongation factor b (P-TEFb) to MHC class II promoters. In cells, P-TEFb is found in small active or large inactive complexes. The large complex is composed of P-TEFb, 7SK small nuclear RNA, and hexamethylene bisacetamide-inducible protein 1 (Hexim1). The present study identifies Hexim1 as a potent inhibitor of CIITA-mediated transcription. Not only the exogenously expressed but also IFN-γ-induced CIITA was inhibited by Hexim1. This inhibition did not result from an association between Hexim1 and CIITA but depended on the intact Cyclin T1-binding domain in Hexim1. Importantly, Hexim1 sequestered P-TEFb from CIITA, as documented by binding competition and ChIP assays. Conversely, the depletion of Hexim1 from cells by siRNA increased CIITA-mediated transcription. Thus, modulating ratios between active and inactive P-TEFb complexes is an additional mechanism of regulating transcriptional activators such as CIITA.