The monoubiquitylation of histone H2B has been associated with transcription initiation and elongation, but its role in these processes is poorly understood. We report that H2B ubiquitylation is required for efficient reassembly of nucleosomes during RNA polymerase II (Pol II)-mediated transcription elongation in yeast. This role is carried out in cooperation with the histone chaperone Spt16, and in the absence of H2B ubiquitylation and functional Spt16, chromatin structure is not properly restored in the wake of elongating Pol II. Moreover, H2B ubiquitylation and Spt16 play a role in each other's regulation. H2B ubiquitylation is required for the stable accumulation of Spt16 at the GAL1 coding region, and Spt16 regulates the formation of ubiquitylated H2B both globally and at the GAL1 gene. These data provide a mechanism linking H2B ubiquitylation to Spt16 in the regulation of nucleosome dynamics during transcription elongation.