In different phases of the transcription cycle, RNA polymerase (Pol) II recruits various factors via its C-terminal domain (CTD), which consists of conserved heptapeptide repeats with the sequence Tyr(1)-Ser(2)-Pro(3)-Thr(4)-Ser(5)-Pro(6)-Ser(7). We show that the CTD of transcribing yeast Pol II is phosphorylated at Tyr(1), in addition to Ser(2), Thr(4), Ser(5), and Ser(7). Tyr(1) phosphorylation stimulates binding of elongation factor Spt6 and impairs recruitment of termination factors Nrd1, Pcf11, and Rtt103. Tyr(1) phosphorylation levels rise downstream of the transcription start site and decrease before the polyadenylation site, largely excluding termination factors from gene bodies. These results show that CTD modifications trigger and block factor recruitment and lead to an extended CTD code that explains transcription cycle coordination on the basis of differential phosphorylation of Tyr(1), Ser(2), and Ser(5).