One of the temperature-sensitive alleles of CEG1, a guanylyltransferase subunit of the Saccharomyces cerevisiae capping enzyme, showed 6-azauracil (6AU) sensitivity at the permissive growth temperature, which is a phenotype that is correlated with a transcription elongation defect. This temperature-sensitive allele, ceg1-63, has an impaired ability to induce PUR5 in response to 6AU treatment and diminished enzyme-GMP formation activity. However, this cellular and molecular defect is not primarily due to the preferential degradation of the transcript attributed to a lack of cap structure. Our data suggest that the guanylyltransferase subunit of the capping enzyme plays a role in transcription elongation as well as cap formation. First, in addition to the 6AU sensitivity, ceg1-63 is synthetically lethal with elongation-defective mutations in RNA polymerase II. Secondly, it produces a prolonged steady-state level of GAL1 mRNA after glucose shutoff. Third, it decreases the transcription read through a tandem array of promoter-proximal pause sites in an orientation-dependent manner. Taken together, we present direct evidence that suggests a role of capping enzyme in an early transcription. Capping enzyme ensures the early transcription checkpoint by capping of the nascent transcript in time and allowing it to extend further.